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Category: Horse Racing / Sport / Banking

Macquarie boffins tip Hartnell for Cup win, but Assign best value

Tuesday, 1 Nov 2016 08:19:25 | Michael Janda

Macquarie says female jockeys on male horses are statistically more likely to win. (AAP: Julian Smith)

There's lots of scams out there claiming to use advanced mathematical modelling to predict which horses will win races.

Key points:

  • Hartnell, Jameka and Big Orange statistically most likely to win according to Macquarie analysts
  • Assign, Curren Mirotic and Almoonqith most undervalued on current odds
  • Horse racing approximately 75pc random according to statistical analysis

But every year some of Macquarie's "quants" — quantitative analysts, who pick investments based on sophisticated data analysis — have a stab at guessing the Melbourne Cup winner.

They are the first ones to acknowledge it's a guess — indeed they note that horse racing appears to be 75 per cent random on a statistical basis.

However, if you're stumped for any other way to guess a Cup victor, other than pulling a name out of the hat in a sweepstakes, here's what the investment banking analysts predict.

Macquarie's trifecta is Hartnell, Jameka and Big Orange, all three of which are also favoured in the betting markets — at 4:00pm yesterday Hartnell and Jameka were the two favourites.

However, given that they rate Hartnell a 9.6 per cent chance of winning and you only get just over $8 for every one you bet on it, it wouldn't qualify as a good bet on the financial markets.

So the quants have come up with a "value investor" index for those looking for horses that may have been mispriced by punters due to human behavioural biases.

On this basis, top of their tips is Assign, ridden by Katelyn Mallyon, the only female jockey in this year's field.

It's a roughie around 33-to-one, but Macquarie says the gender of the horse and its rider means it should probably be at shorter odds, what they've dubbed the "Prince of Penzance effect".

"Female jockeys on male horses win statistically more races after controlling for other variables, and tend to be undervalued," the quants observed.

The other two horses to make up a trifecta for those following Macquarie's high-risk, high-reward undervaluation model are Curren Mirotic and Almoonqith.

Who Shot Thebarman and Wicklow Brave also come in as at least 10 per cent undervalued according to the analysts.

Despite already being near 50-to-one, the analysts calculate Beautiful Romance as the most overvalued horse in the field, above 20 per cent.

Probably their best advice is in the disclaimer at the bottom of the note:

"As always, this report is not meant to be taken seriously and only meant for fun!" they note.

"Horse racing is highly unpredictable (we estimate ~75 per cent random), and we actually know very little about horses.

"Please use your own good judgement when betting, and happy punting!"

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