Following on from the Premier League Fund, I have adapted the algorithm to the Championship.  As well as adding profits, the addition of a second Fund should also reduce the overall volatility of total invested funds.  This is Markowitz portfolio theory working its statistical magic.  Volatility is reduced since the performance of the Premier League and Championship models are completely uncorrelated.

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Still a few weeks to go until the start of the Premier League for 08/09 but I thought I would lay out the expectations for the performance of the Funds for next season. 

After improving the algorithm, the greatest decision i’ve had to make is what level of risk to take.  On the one side, increasing stakes lead to higher returns but at the same time adds to the volatility of the Fund.  The biggest change in the current model over the model used for last season is a vastly reduced stake size.  The question is, how much volatility am I now comfortable with?

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The Alpha Fund used level stakes and was a pre-cursor to the percentage stakes Beta Fund.  Results over the past month have shown the Beta Fund to be superior and continuing to monitor the Alpha Fund serves little purpose.  I am therefore going to drop coverage of the Alpha Fund and the Beta will just be referred to as ‘the Fund’.

This week once again saw moderate gains.  The 6 winning match bets were soured mainly by away wins for Everton and Man City.  These two teams do appear underrated by the model as their relative rankings are low versus the rest of the league consisdering their recent results.
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When I tell people about how I bet on the Premier League the question I am most often asked is, “Er, what’s an algorithm?”.  Well, it’s nothing more than a series of calculations.  They don’t have to be complex, they just follow one after the other.  The output from one calculation is used for the input to the next and so on.  Excel is a great platform for entering and holding the orginal input data, performing calculations and displaying and analysing the results.

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Hindsight is a wonderful thing.  Indeed it’s almost up there with seeing into the future.  Whilst I do not know what the current algorithm model will do in the future I can see how it performed in the past with the benefit of hindsight.  A somewhat fruitless task but fun nonetheless.

So using the existing model I use week to week I amended the stake sizes (same fixed % for all games) to maximise the fund value as at today.  The model begins betting from the 2000/1 season and so includes 7 1/2 seasons including 2007/8 (5718 bets on 2859 matches!).  The average gain per season (counting this 1/2 season as a full season) is 2774%; i.e. profits of over 27x the starting fund each season.  The maximum return in a season was 9594% in 2003/4 and minimum was 137% in 2002/3; i.e. no losing seasons. 

Continued