Mixing
Correlated probabilities
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I'm interested in playing daily fantasy sports but want to calculate my risk beforehand. Let's say I have determined the three best lineups possible but only have enough capital to bet on two of the three. The three lineups are (in order from best to worst): lineup A made up of players P1, P2 and P3, lineup B of players P1, P4 and P5, and lineup C of players P6, P7 and P8.
I need to know the most risk-averse or expected return-maximizing combination of lineups assuming each player is independent of one another and random. Is it better to run with A & B because they are the top two lineups, or do I sacrifice a little bit of skill in B and go with A & C because there are no overlapping players so I don't risk losing both lineups if P1 has a terrible game?
I'm not sure if correlated probabilities was the right title for this question, but I haven't been able to find anything on this through my little research and in my example the win probabilities of lineups A and B are correlated of course.
probability correlation
asked 2 days ago
aaron
62
add a comment |Â
up vote
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down vote
favorite
I'm interested in playing daily fantasy sports but want to calculate my risk beforehand. Let's say I have determined the three best lineups possible but only have enough capital to bet on two of the three. The three lineups are (in order from best to worst): lineup A made up of players P1, P2 and P3, lineup B of players P1, P4 and P5, and lineup C of players P6, P7 and P8.
I need to know the most risk-averse or expected return-maximizing combination of lineups assuming each player is independent of one another and random. Is it better to run with A & B because they are the top two lineups, or do I sacrifice a little bit of skill in B and go with A & C because there are no overlapping players so I don't risk losing both lineups if P1 has a terrible game?
I'm not sure if correlated probabilities was the right title for this question, but I haven't been able to find anything on this through my little research and in my example the win probabilities of lineups A and B are correlated of course.
probability correlation
asked 2 days ago
aaron
62
1
There isn't enough information here to give a precise answer. As a general rule, low correlation is a desirable property of assets in a portfolio (for the exact reason you give). If, say, Player $1$ is so good as to dominate side issues but is injury prone and therefore might be unavailable, then it might make sense to hedge against a possible loss of that player. If you have the historical data, perhaps it is possible to assess the probability (and risk) attached to the unavailability of $1$.
– lulu
2 days ago
add a comment |Â
up vote
0
down vote
favorite
up vote
0
down vote
favorite
I'm interested in playing daily fantasy sports but want to calculate my risk beforehand. Let's say I have determined the three best lineups possible but only have enough capital to bet on two of the three. The three lineups are (in order from best to worst): lineup A made up of players P1, P2 and P3, lineup B of players P1, P4 and P5, and lineup C of players P6, P7 and P8.
I need to know the most risk-averse or expected return-maximizing combination of lineups assuming each player is independent of one another and random. Is it better to run with A & B because they are the top two lineups, or do I sacrifice a little bit of skill in B and go with A & C because there are no overlapping players so I don't risk losing both lineups if P1 has a terrible game?
I'm not sure if correlated probabilities was the right title for this question, but I haven't been able to find anything on this through my little research and in my example the win probabilities of lineups A and B are correlated of course.
probability correlation
asked 2 days ago
aaron
62
I'm interested in playing daily fantasy sports but want to calculate my risk beforehand. Let's say I have determined the three best lineups possible but only have enough capital to bet on two of the three. The three lineups are (in order from best to worst): lineup A made up of players P1, P2 and P3, lineup B of players P1, P4 and P5, and lineup C of players P6, P7 and P8.
I need to know the most risk-averse or expected return-maximizing combination of lineups assuming each player is independent of one another and random. Is it better to run with A & B because they are the top two lineups, or do I sacrifice a little bit of skill in B and go with A & C because there are no overlapping players so I don't risk losing both lineups if P1 has a terrible game?
I'm not sure if correlated probabilities was the right title for this question, but I haven't been able to find anything on this through my little research and in my example the win probabilities of lineups A and B are correlated of course.
probability correlation
asked 2 days ago
aaron
62
asked 2 days ago
aaron
62
asked 2 days ago
aaron
62
asked 2 days ago
aaron
62
62
1
There isn't enough information here to give a precise answer. As a general rule, low correlation is a desirable property of assets in a portfolio (for the exact reason you give). If, say, Player $1$ is so good as to dominate side issues but is injury prone and therefore might be unavailable, then it might make sense to hedge against a possible loss of that player. If you have the historical data, perhaps it is possible to assess the probability (and risk) attached to the unavailability of $1$.
– lulu
2 days ago
add a comment |Â
1
There isn't enough information here to give a precise answer. As a general rule, low correlation is a desirable property of assets in a portfolio (for the exact reason you give). If, say, Player $1$ is so good as to dominate side issues but is injury prone and therefore might be unavailable, then it might make sense to hedge against a possible loss of that player. If you have the historical data, perhaps it is possible to assess the probability (and risk) attached to the unavailability of $1$.
– lulu
2 days ago
1
1
There isn't enough information here to give a precise answer. As a general rule, low correlation is a desirable property of assets in a portfolio (for the exact reason you give). If, say, Player $1$ is so good as to dominate side issues but is injury prone and therefore might be unavailable, then it might make sense to hedge against a possible loss of that player. If you have the historical data, perhaps it is possible to assess the probability (and risk) attached to the unavailability of $1$.
– lulu
2 days ago
There isn't enough information here to give a precise answer. As a general rule, low correlation is a desirable property of assets in a portfolio (for the exact reason you give). If, say, Player $1$ is so good as to dominate side issues but is injury prone and therefore might be unavailable, then it might make sense to hedge against a possible loss of that player. If you have the historical data, perhaps it is possible to assess the probability (and risk) attached to the unavailability of $1$.
– lulu
2 days ago
add a comment |Â
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1
There isn't enough information here to give a precise answer. As a general rule, low correlation is a desirable property of assets in a portfolio (for the exact reason you give). If, say, Player $1$ is so good as to dominate side issues but is injury prone and therefore might be unavailable, then it might make sense to hedge against a possible loss of that player. If you have the historical data, perhaps it is possible to assess the probability (and risk) attached to the unavailability of $1$.
– lulu
2 days ago