Trade Idea #2: Lay Arsenal for Top 2 @ 2.00 or better

For this week’s long-term trade idea we take a closer look at the Top 2 market in the English Premier League, with primary focus on Arsenal.

Position
Lay Arsenal for Top 2 @ 2.00 or better

Thesis
At the time of writing the market is implying a ~52% probability of Arsenal finishing Top 2, essentially pricing them at 70% over Manchester United.

Our analysts believe that the market is rewarding Arsenal for their unprecedented chance creation, but failing to account for their inefficiency in converting these into goals.

Quantitative Analysis

 CREATION

EPLTotalsQuery

Arsenal rank 1st for Great Chances (18) and Good Chances (30) this season, while also ranking 2nd for Attempts (63), Attacking Third Entries (526) and Corners (50). However, they are =5th for Goals (10) and currently sit 4th in the league standings.

ArsenalQueryTool2

Last season they ranked 1st for Good Chances (147) and Attacking Third Entries (2334), 2nd for Corners (255) and 3rd for Goals (71), while they were 4th for Great Chances (54) and Attempts (253). They ended up finishing 3rd in the league.

ArsenalQueryTool3

In 2013/14 they ranked 4th for Goals (68) and Great Chances (57), 7th for Good Chances (124) and Attacking Third Entries (2188), =8th for Corners (210) and =12th for Attempts (236). They finished 4th in the league.

CONVERSION

engpr_chances_for1516

At the start of 2015/16, Arsenal have been by far the most profligate team. They have converted just 0.217 Great Chances and 0.032 Good Chances. By comparison, Manchester United have converted 0.666 Great Chances and 0.0666 Good Chances.

engpr_chances_for1415start

At the start of last season, no team was anywhere near this profligate and Arsenal themselves were converting almost 0.4 of their combined Great and Good Chances. However, at this time they were only averaging ~3.8 per game. 

engpr_chances_for1415

By the end of last season, Arsenal combined their ruthlessness with more prolific chance creation to help them to 3rd place. However, it is important to note that their conversion dropped to <0.25 of their Great and Good Chances, as their creation rose to ~6.9 per game.

The eventual top four were clearly the most prolific in the league, with winners Chelsea (~0.27 of ~ 6.5 scored) and runners-up Manchester City (~0.28 of ~7.15 scored) having the strongest correlation between conversion and creation.
 engpr_chances_for1314start

At the start of 2013/14 Arsenal began very strongly, creating a combined ~7.5 Great and Good Chances per game. Crucially, they scored ~0.215 of them at a time when conversion was down across the league.

engpr_chances_for1314
By the end of 2013/14 Arsenal had done a good job of maintaining their prolificacy, trailing only winners Manchester City and runners-up Liverpool. However, they could only convert this into a 4th place finish due to Chelsea’s far superior defensive record (26 goals conceded vs. 40 for Arsenal).

As in 2014/15 the eventual top four were clearly the most prolific teams, though this time winners Manchester City (~0.29 of ~8.5 scored) and runners-up Liverpool (~0.29 of ~7.8 scored) were significantly better at converting their many chances than 3rd place Chelsea (~0.215 of ~7.2 scored) and 4th place Arsenal (~0.26 of ~6.5 scored).

Risk Factors

  • Arsenal keep up an unprecedented level of creation and significantly improve conversion.
  • Manchester United fail to maintain their usual rate of creation/conversion.
  • Chelsea do not “bounce back” in the expected manner.