Who knew? Econometric tools aren’t just good at predicting market events but they can also make you more successful in your sports betting. Indeed, UBS used its own predictive software to figure out who would win the next soccer World Cup, which this year will be held in Russia. The investment and banking giant also analyzed how the sporting event will affect the Russian economy as a whole and how investors can prepare for this event.
Can investment tools predict anything?
UBS Global Wealth Management’s Chief Investment Office (CIO) today published a report on how its insights and tools can be applied to predict the outcomes of this year’s major global sports event: the FIFA World Cup 2018. Following a systematic approach, the CIO analyzed each team’s likelihood of doing well at the tournament’s different stages.
According to Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, this strategy can help people avoid cultural bias and make more clear-headed decisions – just like with any other investment choice. He explained: “No matter whether they are analyzing global markets or soccer tournaments, people tend to be biased towards local favourites. The same quantitative discipline that the Chief Investment Office applies to investments has proven useful in successfully looking beyond a home bias in portfolios and sports events.”
So, who is most likely to win?
Simulations indicate no country has higher odds of winning the tournament than Germany, leading the table with a likelihood of 24 percent. Brazil and Spain also stand a good chance of lifting the trophy, with chances of 19.8 and 16.1 percent respectively. On the other hand, Russia will start in the Cup’s weakest group and is expected to progress to the round of 16, where it is likely to lose against Spain or Portugal.
What investors can learn from football players
Michael Bolliger, Head of Emerging Markets Asset Allocation, UBS Global Wealth Management and lead author of the study, adds: “Investors can learn a lot from successful football teams. Seeking agility, building a diversified portfolio of talent, and remaining calm under pressure are virtues exemplified by successful football teams and investors alike.”
Analyzing the impact on the Russian economy
The report also includes a section on how to invest in the World Cup’s host, Russia, as the tournament is likely to impact its economy. While reputational gains are difficult to quantify, UBS expects only a minor uptick in international tourism for Russia as a travel destination. However, the estimated USD 12 billion spent on infrastructure and related projects in preparation of the games might generate greater economic benefits in Russia compared with more developed economies.