return on investment

[Shotgun]

Does anyone know the formula for translating money line differences into the expected return on investment? For example, I make a team +125 dogs. The actual line is +180. I have a printout that shows the ROI is 24.4%, but have forgotten the formula for figuring that out. I would like to save a bit of time by sticking it into Excel with the rest of my baseball program but am suffering brainlock.

 

[Shotgun]

OK...I'm making a bit of progress:

I translated the money line into %:

My line=-200...-2.00/(-2.00-1)=66.66%
Actual #=-170....-1.70/(1.70-1)=62.96%

divide 66.66%/62.96%=1.058

leaves me with a return on investment of 5.8%

I'll have to tweak it a bit. It looks like or underdogs I'll need a separate formula: +2.00/(+2.00+1)=66.66%. The formula also doesn't work if I make a team the favorite while the line has that team as a dog...some "IF" statements should work for that.


If there is another way to do this I'd appreciate the help.

[This message was edited by Shotgun on May 20, 2003 at 03:09 AM.]

 

[SixthSense]

Shotgun -

You make the line -110 and the actual line is +145

Your return on the -110 is 1/1.10 = .91 + 1 (the amount you originally risked) for a total return of 1.91.

Your return on the actual line of +145 = 1.45 + 1 (the amount you originally risked) for a total return of 2.45.

The difference between what you will get with the true line and your line is 2.45 - 1.91 = 0.54 divided by your line 0.54/1.91 = 28.3% on this team.

 

[Shotgun]

Thanks Sixth...your way looks a bit simpler so I'll give that a shot.