Goldman forecasts Brazil World Cup win

Goldman quants clearly have too much time on their hands:

Today we introduce our statistical model for predicting the outcome of the 2014 World Cup. At a very high level, our approach is as follows:

We construct a stochastic model that generates a distribution of outcomes for each of the 64 matches of the 2014 World Cup, from the opener between Brazil and Croatia on June 12 in São Paulo through the final on July 13 in Rio de Janeiro.

• The predictions for each match are based on a regression analysis that uses the entire history of mandatory international football matches—i.e., no friendlies—since 1960.
• This givesus about 14,000 observations to estimate the coefficients of our model. The dependent variable in the regression analysis is the number of goals scored by each side in each match.

Following the literature on modelling football matches, we assume that the number of goals scored by a particular side in a particular match follows a Poisson distribution.

And the result:

Does it matter for markets? Yes, if you win or lose the final:

I guess the ASX is safe then…