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- UBS has used statistical modelling to forecast the outcome of the 2018 World Cup, which starts in Russia on June 14.
- Reigning champions Germany are set to retain their title in 2018, with a 24% chance of winning the tournament, according to UBS.
- Brazil, Spain, and, surprisingly, England are the next most favoured teams in UBS’ model.
- At other end of the scale it is bad news for Panama, Egypt, Tunisia, Costa Rica, and Saudi Arabia, all of whom the bank’s analysts say have literally zero chance of being crowned champions.
- You can see all of Business Insider’s World Cup coverage here.
LONDON – Every four years, the world watches in awe as 32 teams from around the globe take part in the FIFA World Cup, perhaps the biggest sporting occasion on the planet.
The World Cup comes replete with a number of storied traditions – England fans wildly overestimating their team’s chances of victory, a German win on penalties, and at least one lowly minnow nation shocking us all by performing well, to name just a few.
In recent years, however, a new and slightly nerdy trend has emerged – major banks trying to predict the outcome of the tournament using incredibly complicated statistical models usually reserved for analysing economics or businesses.
Several lenders, including the likes of Goldman Sachs, now engage in this tradition, and with less than a month until the start of the tournament, the first forecast of 2018 has been released by Swiss bank UBS.
UBS is backing Germany, the reigning world champions and perennial tournament acheivers, to retain their crown in 2018, giving Europe’s biggest economy a 24% chance of winning football’s ultimate prize.
Close behind Germany in UBS’ estimations are Brazil and Spain, who respectively have a 19.8% and 16.1% chance of lifting the Jules Rimet trophy in Moscow on July 15.
Perhaps shockingly for many England fans after decades of disappointment at major tournaments, England are the fourth favourites for the cup, according to UBS’ modelling, although they have a paltry 8.5% chance of winning.
“England has a balanced team, an attribute that complements teamwork and can transform a successful team into a future champion,” Mark Haefele, Chief Investment Officer at UBS Global Wealth Management said in a statement.
At the other end of the scale it is bad news for Panama, Egypt, Tunisia, Costa Rica, and Saudi Arabia, all of whom have literally zero chance of being crowned champions, according to the bank’s analysts.
You can see a full table of probabilities below (note that UBS included Italy, which failed to qualify, in its model as a courtesy to the great footballing nation):
UBS created its predictions by inputting a series of variables, including the ELO ranking of teams – which is an objective measure of how good they are – into a statistical model, and then running that model through a so-called Monte Carlo simulation.Here’s the bank’s explanation of how it is done:
“To account for the many different roads to the final, we conduct what statisticians call a Monte Carlo simulation. What might sound fancy to some readers is in practice quite simple: Instead of mapping out all the different constellations, we draw a large number of random variables and use these to bring in a random component to our calculations and to simulate the championship. A better team is still more likely to win than its lower ranked opponent, but this is sport, and upsets DO happen. After we’ve repeated this again and again, we end up with the results of 10,000 virtual tournaments. We then simply count how many times each team won, made it to the semis, or was already eliminated in the group stage.”
UBS’ predictions are broadly in line with those of major bookmakers, with most firms placing Germany, Brazil, and Spain as their three favourites.
While major banks have taken to trying to forecast major tournaments, their records aren’t exactly stellar. Goldman Sachs is particularly poor, with the bank getting the winner wrong for both the 2014 World Cup, and the 2016 European Championships.
In 2014 Goldman predicted a Brazil win, only to see the hosts humiliated by Germany in the semi finals, while in 2016, hosts France were tipped for greatness, but lost 1-0 to Portugal in the tournament’s final.
Goldman did, however, argue that during the 2014 World Cup it had “predicted the winner of every match in the knockout stage except for the 7-1 semifinal between Germany and Brazil.”