Debuting our NFL Fantasy coverage with Fantasy Quants
July 31st, 2008 by Jeffrey Boyer
As if the news of mainstream media getting on board the fantasy college football bandwagon was not enough excitement, today is the day that Fantasy College Blitz and Jeff Boyer of Fantasy Quants debut our 2008 NFL Fantasy coverage.
The brief description that follows serves as a “white paper” or user guide to Jeff’s rankings and his quantitative analysis. It might be a bit heavy, but think of it in a “risk-adjusted rankings” context – safer picks get higher rankings. Jeff has the floor.
FantasyQuants is an exclusive fantasy football database dedicated to analyzing players and performance with a proven mathematical formula. Our quantitative formulas have evaluated fantasy football players over the past few seasons (2004 – 2008) using analysis to evaluate performance, risk, and volatility.
Many fantasy football websites allocate a major portion of their research and web space analyzing and evaluating the top 10 players at each position. We will leave that analysis to them. For most fantasy players, its common knowledge that LT will be a top running back, Terrell Owens a valuable WR, and that Tom Brady will throw for a ton of yardage. At FantasyQuants, we believe that a fantasy draft truly begins after the first couple rounds – this is where championships are won! To us, your last pick is just as valuable as your first.
Our statistical models have been created to identify players undervalued by the general public. Using several long-standing analytics from MODERN PORTFOLIO THEORY allows us to systematically create value in your fantasy drafts.
Following our recommendations will give you a substantial edge in avoiding busts and identifying sleepers in your draft. You may view your first round pick in your draft picks as your stud player; we view it as an added bonus!
Glossary
STANDARD DEVIATION
A measure of the dispersion of a set of data from its average. The more spread apart the data is, the higher the deviation. Standard deviation is applied to past performance to measure the player’s volatility. A volatile performing player like Santana Moss would have a high standard deviation. Note: high standard deviation is not always a bad thing. Upside standard deviation can lead towards some big weeks. However, when comparing two equally performing players, the player with the lower SD will be preferred.
EFF RATIO
A modification of the “Sharpe Ratio” (see below) our proprietary Efficiency Ratio takes into consideration the players expected performance versus the performance of players who have been readily available on the fantasy waiver wire during the season. This ratio also takes into consideration the players standard deviation to produce our Efficiency Ratio. This metric is not an overall ranking, but it represents the closest measure to an overall rankings system that we will use.
VMR
In probability theory and statistics, the Variance-to-Mean Ratio is a measure of the dispersion of a probability distribution. It is defined as the ratio of the variance to the mean and is calculated as
(standard deviation squared) / average return = VMR.
The VMR is a good measure of the degree of randomness in a players week to week scoring. A player like Santana Moss will have a high VMR number and will be highly unpredictable during the season.
ADP
Average Draft Position (ADP) works with approximately 1,000 fantasy drafts that have taken place leading up to a particular season. An ADP of 35.00 would mean that player is, on average, drafted with the 35th selection overall – 4th round, pick number 5 in a ten team league. This number will change leading up the start of the current season as new drafts are added, and historical data is locked once that season has begun.
VAL RATIO
The Value Ratio is a mathematical formula which weights the players Efficiency Ratio (above) and ADP (above) into one single representative number. This number is used to identify a small number of “Value Investments” (see below) during the fantasy draft. Issac Bruce has represented a long standing value play – a player drafted in a later round that produces consistent and productive numbers.
WEIGHTED
The Weighted value simply adds an additional metric by equal-weighting the EFF and VAL ratios. This measurement combines a players “value” opportunity along with pure performance ability.
“SHARPE RATIO”
A widely used term in finance, this ratio was developed by Nobel Laureate William F. Sharpe to measure risk-adjusted performance. It is calculated by subtracting the risk-free rate from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns. The Sharpe ratio tells us whether the returns of a portfolio are due to smart investment decisions or a result of excess risk. This measurement is very useful because although one portfolio or fund can reap higher returns than its peers, it is only a good investment if those higher returns do not come with too much additional risk. The greater a portfolio’s Sharpe ratio, the better its risk-adjusted performance has been.
“MODERN PORTFOLIO THEORY”
In finance, a theory on how risk-averse investors can construct portfolios to optimize or maximize expected return based on a given level of market risk, emphasizing that risk is an inherent part of higher reward. According to the theory, it’s possible to construct an “efficient frontier” of optimal portfolios offering the maximum possible expected return for a given level of risk. This theory was pioneered by Harry Markowitz in his paper “Portfolio Selection,” published in 1952 by the Journal of Finance.
“VALUE INVESTING”
In finance, this is the strategy of selecting stocks that trade for less than their intrinsic value. Value investors actively seek stocks of companies that they believe the market has undervalued. They believe the market overreacts to good and bad news, causing stock price movements that do not correspond with the company’s long-term fundamentals. The result is an opportunity for value investors to profit by buying when the price is deflated.
Stay tuned as we will debut the Quarterback rankings later this week.
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