Investment bank Macquarie Group Ltd (ASX: MQG) has thrown its hat in the ring to predict the winner of the Russia 2018 FIFA World Cup.
I am not talking about ASX companies like fast food delivery company Domino's Pizza Enterprises Ltd. (ASX: DMP) and wearable sports device maker Catapult Group International Ltd (ASX: CAT), which I have written about before as being possible beneficiaries from the global sporting event.
While most investors will feel like winners today with every sector trading in the green to push the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index up by nearly 1%, Macquarie is doing one for the punters by using their stock picking skills to predict Spain as the winner of the World Cup.
Its quantitative model correctly picked Germany as the 2014 winner the last time round, so it will be interesting to see if the experts at the Millionaire's Factory can find their second calling.
A quant model ranks stocks, or in this case teams, based on a scorecard to predict outcomes.
"After crunching the numbers Spain ends up on top of our model," said Macquarie.
"Recent news around the resignation of their coach has raised concern, analogous to a surprise CEO departure for a stock, but this has so far not moved betting markets sufficiently to warrant a rerating. Some even see this event as a positive, galvanising the team and will in fact boost their performance."
Macquarie's "scorecard" is based on five factors and styles. The first is "rankings" which looks at a team's past performance, much like a share price if you were looking at stocks.
The second is "rankings momentum" which captures trends in a team's performance, while the third "squad" is used to measure the characteristics of a team going into the World Cup.
These characteristics include number of caps, goals per cap, and players in the top league to work out the team's propensity to score a goal.
The last two are "sentiment" and "innovative data". Sentiment is based on betting odds (which is surprisingly accurate for many things including tipping election winners) and a public online ranking tool.
Innovative data covers the age of the players in a squad and the squad's theoretical Transfer Market Value, which is the market value of the players in the squad if they were to be transferred to another club.
In case you are wondering, France has the most expensive team while Germany is forecast by Macquarie to come in second. Sadly, the Socceroos are ranked 27th on the broker's model.
Of course, this isn't meant to be taken seriously. Macquarie stressed that this exercise was only for "fun".
"Whilst we have some diehard football fans in the team we are by no means experts in the world of sporting odds and thus this report should not be relied on as such," said the broker, just in case you'd take this forecast in the same light as their stock calls.
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