Sports Betting and Portfolio Selection Theory

It is well-known how to allocate a portfolio of risk assets, such as a stock portfolio, in order to maximizing the expected return on capital given a certain risk level, measured as the standard deviation of the return. The solution depends on the risk-free interest rate as well as the various stocks' expected returns, standard deviations and pairwise correlations.
A bet on, say 10 euro, that for example Liverpool wins over Manchester U at odds 2.5 can also be seen as a risk asset. Conditional on a probability model the expected return and standard deviation of the bet can be derived as well as correlations with other bet returns, for example, the return on the bet that Liverpool wins 3-1 or with at least one goal. The aim is to illustrate how the classic portfolio selection theory can be applied to betting.