Ever wondered if your music taste reflects more than just your mood? What if it also influenced the stock market? In this episode, we explore a fascinating study that examines the connection between national music sentiment—measured through Spotify streaming data—and stock returns. Researchers developed the SWAV score (Stream Weighted Average Valence) to track how positive the music people are listening to is and found a surprising correlation: when SWAV scores are high, stock market returns tend to be positive in the same week. This suggests that collective mood, as reflected in music choices, can influence short-term investment decisions.

However, the study also reveals that market corrections often follow these sentiment-driven shifts, highlighting the psychological link between emotions and financial behavior. By analyzing trends in music, behavioral finance challenges the traditional view of a purely rational market.

Could your playlist be a hidden market indicator? Tune in to find out!

Find the full research paper here: https://community.quantopian.com/c/community-forums/music-sentiment-and-stock-returns-around-the-world-quantpedia

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Quant Radio is an AI-generated podcast, intended to help people develop their knowledge and skills in Quant finance. This podcast is not intended to provide investment advice.