Yesterday I wrote about some of the analytical framework that goes on in setting the sports line. I might as well tie together this analytical framework in setting point spreads to investing, and economics.
Sports Gambling
- Point Spread = Home Court + Team Stats + Popularity +.......
Economics
- GDP = Consumer Spending + Business Investments + Government Spending + Net Trade
Investing
- Stock Price = Earnings Per Share + Book Value + Market Cap +.....
In the three examples, an outcome can be estimated through regression analysis. How we determine the ultimate value of something is based on the parts that make up the thing. Using regression analysis can be one of the most powerful ways of finding the truth in gambling, investing, and economics.
Note: I've dumbed things down considerably to make this as accessible as possible. There's also usually a coefficient value in front of each factor, but adding coefficients would make it look more confusing. There's also the assortment of problems from data mining, multicollinearity, bad models, etc., etc. But the three example is its simplest form
Hello. Very nice blog, i added rss
In this post you write: Yesterday I wrote about some of the analytical framework that goes on in setting the sports line
I can't find this post.. Could you please send me a link?
Thanx