Originally Posted by
hutennis
Using Granchrow formula for calculating variance
variance = (bet_size)2 * (decimal_odds - 1)
I did calculation for my results and got a bit confused.
For each and every bet variance equals either exactly my risk amount for bets on favorit
or my expected profit for bets on underdog.
etc ...
Have i done it correctly and if yes what is the reason?
TY for help
Yes, your observation is entirely accurate.
Recall that the win size on a wager of BetSize at decimal odds of DecOdds is simply:
WinSize = BetSize * (DecOdds - 1)
So the standard binary outcome variance formula could be rephrased as:
σ2 = WinQuant * BetSize
So if you chose to wager to win 1 unit for USOdds ≤ -100, then your binary outcome variance could be calculated via:
BetSize(USOdds≤-100; WinSize=1) = -USOdds 100 units
σ2(USOdds≤-100; WinSize=1 unit) =
= 1 * BetSize
= -USOdds 100 units2
And similarly, if you chose to risk 1 unit whenever USOdds ≥ +100, then your binary outcome variance could be calculated via:
WinSize(USOdds≥+100; BetSize=1 unit) = USOdds 100 units
σ2(USOdds≥ +100; BetSize=1 unit) =
= WinSize * 1
= USOdds 100 units2