2014 - Round 3: A Slight Ratcheting Up

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Based on the TAB Bookmaker's pre-game Round 3 prices, this week's results should be high in "information content". Or, put another way, they're likely to tell us more about the abilities of the 18 teams in the competition than we thought previous rounds would.

The reason they're expected to provide more information is because, more often than not, they pit teams of roughly equal abilities against one another, and we learn more from knowing which of two apparently equal teams is superior than we do from confirming that a stronger team is superior to a weaker one. (We learn most of all, however, when a weaker team defeats a stronger one.)

In six of the nine contests the favourite is priced at $1.58 or higher and, in two more they're priced at $1.28.

One way to formally quantify the likely information content of a result is via expected surprisals using which we find that, on average, each contest this week is expected to yield 0.88 bits of information, eclipsing the 0.83 expected in Round 1 and the 0.84 expected in Round 2. (As it turned out, because of the number and magnitude of the upsets in it, Round 1 actually delivered 1.22 bits of information per result, but we didn't know that pre-round.)

WAGERS

The Funds' response to these Head-to-Head and to the other TAB prices has been to lift their collective level of activity. In total, 6% of the entire original Recommended Portfolio is as risk this week, a higher proportion than both the 4.1% that was at risk in Round 2 and the 3.4% in Round 1. The Line Fund is responsible for the largest portion of that increase, having found six line contests to its liking this week, two more than it detected during the first two rounds combined.

Two wagers is all the Head-to-Head Fund can muster this week, the same number as it made in the 1st round of the season and one more than last week. One of this week's bets is on the Gold Coast and is its largest bet this season, the other is on the Dons and is its smallest. Neither threaten to make us rich as both are priced at around $1.60.

Eight Margin Fund wagers across four games round out the weekend's wagering. In three of those games these wagers span two different buckets, a situation that has prevailed in our SuperMargin wagering on the majority of occasions this year and which leave Investors with frustrating margin "holes" in the profit and loss lines that underscore just how much we're cheering for a result and not a team when we make this type of wager.

Combined, the Funds' wagers cover all but two of the games and present risk and return profiles as follows:

A Hawthorn win by between 3 and 9 points would provide Investors with the best single-game return for the round, lifting the Recommended Portfolio by a little over 2c. Next best would be an Essendon win by 13 to 19 points which would land three of the four wagers the Funds have collectively ventured on this game. This result would yield a gain of just over 1c.

Four games threaten losses of roughly the same magnitude - a little under 1c - these being the Hawthorn v Fremantle game (should the Hawks lose by 3 points or more), the Gold Coast v Brisbane Lions game (should the Gold Coast lose), the West Coast v St Kilda game (should West Coast lose, draw, win by less than 40 points or by between 60 and 62 points), and the Essendon v Carlton game (should Essendon lose).

The best possible set of results would lift the Recommended Portfolio by a little over 6c while the worst possible set of results would see it drop by a little over 5c. As such it's not possible for the Recommended Portfolio to be in the red at the end of Round 3, though it's also not likely to have made double-digit returns.

HEAD-TO-HEAD TIPS

Whilst the TAB Bookmaker might be expecting to be surprised this weekend, most of the Head-to-Head Tipsters do not. Even in the game with the highest level of disagreement - the Hawks v Freo Grand Final rematch - only eight Tipsters have a contrarian view. In that game, majority support is with the underdogs, Fremantle, who swapped from favouritism to underdoggedness only once the teams for the weekend had been announced.

In every other game majority support is with the TAB Bookmaker favourite, unanimously in three cases (West Coast over St Kilda, GWS over Melbourne, and Essendon over Carlton).

Once again this week Home Sweet Home is the Tipster Most Different, registering an astonishingly high 52% Disagreement figure meaning that a randomly chosen tip for a randomly chosen Tipster is slightly more likely to disagree with Home Sweet Home than to agree with it. Combo_NN_1 has also continued its contrarian ways, recording a very high Disagreement figure of 41%. C-Marg is with two other Tipsters, Combo_NN_2 and Bookie_9, on the next rung of contrarianness.

MARGIN PREDICTION

MatterOfStats' Margin Predictors are displaying levels of agreement that are as high, if not higher, than those we saw for the Head-to-Head Tipsters. In four contests all Predictors are expecting the same team to win, and in four more contests only three or fewer Predictors disagree with the majority opinion. As for the Head-to-Head Tipsters, it's only the Hawthorn v Fremantle game that has induced any significant divergence of opinion.

In that clash, margin predictions range from a Hawthorn win by 6 points to a Fremantle win by 14 points, a span that places this game at the low end of the high-low prediction spans seen this week. Saturday's Adelaide v Sydney and  Sunday's Essendon v Carlton clashes have smaller ranges (16 points), while Sunday's Kangaroos v Port Adelaide clash has roughly the same range (20 points). The largest range comes in the West Coast v St Kilda game where West Coast is expected to win by between 41 and 78 points, a range of 37 points.

Combo_NN_1 is the Predictor Most Different this week, its average margin prediction differing in absolute terms from the all-Predictor average by 10.6 points. Combo_NN_2 is next most different at 9.1 points per game, while C-Marg is third but differs by only 6.8 points per game on average.

ChiPS Predictions

Relative team form influences C-Marg's predictions for the first time this week, since this variable is only considered by ChiPS once two full rounds have been completed in a season. The effect of its inclusion has been greatest in the West Coast v St Kilda game, where it's added almost 13 points to the Eagles' predicted margin of victory, but has also been significant in the GWS v Melbourne game where it's added almost 11 points to GWS' predicted margin, and in the Kangaroos v Port Adelaide game where it has added 9.1 points to Port Adelaide's predicted margin.

Form, you might recall, enters ChiPS' margin predictions in the form of an additive term of about two-thirds of the difference between the relative change in team ratings over the previous two rounds. So, for example, if Team A's rating increased from 1,002 to 1,006 over this period, while Team B's fell from 1,010 to 1,000 then Team A's expected margin of victory would be increased by 0.65 x [(1,006 - 1,002) - (1,000 - 1,010)] or about 9 points.

One other thing to note about the C-Marg predictions this week is that Adelaide suffers a 1.7 point Home Ground penalty this week because it is playing at Adelaide Oval, a ground at which it has limited history and which is therefore considered to be an "Other" home ground.

Converting the C-Marg predictions into probabilities produces results suggesting that three Home teams are slightly overpriced: Adelaide, GWS and Essendon. As such, C-Prob would recommend smallish wagers on these three teams in amounts consistent with the last column of the table above.

PROBABILITY PREDICTIONS

Finally we turn to the Probability Predictors and firstly consider the Head-to-Head Probability Predictors where we find that in only two games - Hawthorn v Fremantle and Adelaide v Sydney - are there Predictors on either side of a 50% assessment.

The two Head-to-Head Predictors - which, this week, as in most, have offered identical probability assessments - are the most different in absolute percentage point terms from the all-Predictor averages this week. But even they differ, on average, by less than 6% points. ProPred is next most different at 5.7%, while C-Prob rounds out the podium with a 5.5% average absolute difference.

The Line Fund algorithm likes the Hawks' chances against Fremantle most of all, rating them 64% chances to prevail on line betting. Port Adelaide (rated 62% chances), West Coast (60%), Essendon (58%), and Adelaide (57%) are the other teams rated highly likely to succeed by this algorithm.