Off the beaten track

Advisers might want to listen more closely to songs on the radio.

According to an as-yet-unpublished study, there is at least a loose correlation between stock market volatility and the average beat variance of popular music.

“We’ve found that the average beat variance can be used to predict next year’s market volatility,” said Phil Maymin, assistant professor of finance and risk engineering at Polytechnic Institute of New York University. He applied beat variance measurement technology to analyze 50 years’ worth of chart-topping songs in relation to the Standard & Poor’s 500 stock index’s volatility.

Market volatility in 2009 should be lower than the 42% average last year because the variance in the beats of some of the most popular songs in 2008 weren’t as high as they were in 2007, Mr. Maymin said.

The measurement doesn’t refer to whether a song’s beat is fast or slow but rather how frequently the beat changes during the song.

The biggest surprise was that beat variance is a leading indicator and that a low average beat variance suggests increased volatility, Mr. Maymin said.

Songs with higher beat variances include Laurie London’s 1958 hit “He’s Got the Whole World in His Hands,” Ray Charles’ “Georgia” in 1960 and The Beatles’ “Revolution” in 1968. Those songs preceded periods of lower market volatility, Mr. Maymin’s research shows.

Lower-beat variance songs were particularly concentrated in the mid- to late 1980s, preceding a higher-market-volatility period. According to the research, 39 of the 65 songs with the highest beat variances were on top of the pop music charts during that period.

One was “Loco-Motion” by Kylie Minogue in 1988.

And of course there was the obvious warning of the 2000 technology market implosion when Britney Spears released “Baby One More Time” in 1999.

Mr. Maymin doesn’t profess to know why the correlation exists. “This is the first stage of looking at the mood of popular culture and how it relates to the stock market,” he said.