Music and the Market: Song and Stock Volatility
29 Pages Posted: 5 Nov 2008 Last revised: 12 Oct 2011
Date Written: October 11, 2011
Popular music may presage market conditions because people contemplating complex future economic behavior prefer simpler music, and vice versa. In comparing the annual average beat variance of the songs in the US Billboard Top 100 since its inception in 1958 through 2007 to the standard deviation of returns of the S&P 500 for the same or the subsequent year, a significant negative correlation is observed. Furthermore, the beat variance appears able to predict future market volatility, producing 2.5 volatility points of profit per year on average.
Keywords: music, complexity, volatility, billboard, strategy, behavioral
JEL Classification: G12
Suggested Citation: Suggested Citation