How is Music a Non-Correlated Asset?

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Reading time - 12 min

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In today’s ever-evolving investment landscape, diversifying portfolios beyond traditional stocks and bonds is more essential than ever. A growing area of interest is non-correlated assets—investments that do not move in sync with traditional financial markets. Among these, music has emerged as a compelling and unconventional option. Let’s dive into why music stands out as a non-correlated asset and how it’s reshaping the investment landscape.

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What is a Non-Correlated Asset?

A non-correlated asset is an investment whose value doesn’t move in tandem with traditional financial markets. Unlike stocks, bonds, or other commonly traded assets, non-correlated assets behave independently, meaning their price changes are not influenced by the same factors.

In times of market volatility, non-correlated assets can serve as a hedge or stabilizing force in an investor's portfolio. For instance, while stock markets might plummet during a financial crisis, non-correlated assets may retain or even grow in value. This makes them a powerful tool for diversification and risk management.

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The Role of Correlation in Portfolio Building

To understand the value of non-correlated assets, it’s important to grasp the concept of correlation in investing. Correlation measures how the movements of two investments relate to one another. In finance, this relationship can be grouped into three main categories:

• Positive Correlation: When two investments move in the same direction after a market event. For example, an increase in oil prices might boost the value of energy stocks.
• Negative Correlation: When two assets move in opposite directions. For instance, gold often rises when equity markets decline, illustrating a negative correlation.
• No Correlation: When the performance of one investment has no effect on the other. These assets move independently, offering unique diversification benefits.

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Why is this important?

By incorporating assets with varying levels of correlation into their portfolio, as previously explained, investors attempt to ‘hedge’, or reduce overall risk. Non-correlated assets, in particular, are especially valuable for mitigating the effects of market turbulence. While their value may still respond slightly to major economic events or market-wide movements, these fluctuations are minimal and do not approach a correlation coefficient of 1.

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Are non-correlated Assets the future of Investing? How are non-correlated assets reshaping the industry?

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Non-correlated assets are increasingly seen as the future of investing due to their ability to provide stability in times of market volatility. Unlike traditional assets like stocks and bonds, non-correlated assets, such as music royalties, precious metals, and physical collectibles, operate independently of the financial markets. This independence offers diversification benefits and may reduce overall portfolio risk, making them attractive to investors looking to mitigate market turbulence.

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As investors seek more resilient alternatives, non-correlated assets are reshaping the industry by expanding the range of investment options available. They challenge the traditional market structure by offering potentially steady returns and growth opportunities that aren’t tied to economic cycles. Platforms like MARS are democratizing access to these assets, making them more accessible to everyday investors, while large institutional investors are also recognizing their value. This shift marks a significant transformation in how people approach investing, moving beyond traditional assets toward a broader, more diverse portfolio.

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Expanding Your Portfolio with Non-Correlated Investments

In addition to music, there are other ways to diversify your portfolio with nontraditional, non-correlated assets. Here are some asset types that operate independently of the stock market:

• Real Estate and REITs: Real estate performs independently of the stock market, often serving as a hedge against inflation. Real Estate Investment Trusts (REITs) provide access to this market without owning physical property, with low correlation to traditional equities.
• Digital Assets: Cryptocurrency, NFTs, apps, websites, and other digital assets have their own niche markets and high growth potential. While volatile, they offer opportunities for investors willing to explore new risk/reward boundaries.
• Physical Collectibles: Artwork, antiques, jewelry, vehicles, and baseball cards are examples of physical assets whose value is typically independent of stock market trends. These often have their own financial ecosystems for valuation and trade.
• Precious Metals: Gold and silver are classic hedges against market downturns, providing stability during inflationary periods.
• Mortgage Funds: These funds allow investors to earn returns from the interest on loans without the need to maintain physical properties.
• Music Royalties: Generate passive income by purchasing partial rights to an artist’s music and collecting royalties on a regular basis.
• Venture Capital and Private Equity: Offer equity stakes in startups or established private companies, often with higher returns but increased risk.
  
  

Why is Music Considered a Non-Correlated Asset?

• Revenue Streams: Music can generate multiple streams of income, including royalties from streaming services, licensing deals, live performances, merchandise sales, and more. These revenue sources are less dependent on the stock market and have a strong cultural foundation. For example, during the COVID-19 pandemic, when global markets experienced significant downturns, music streaming services like Spotify and Apple Music saw a surge in user activity and subscriptions. People turned to music for entertainment during lockdowns, showcasing how demand for music remains strong, even in times of economic uncertainty. This occurred despite the severe hit to live performances, a key revenue source for many artists, further supporting the idea of music as a non-correlated asset.
• Cultural and Emotional Value: Music’s emotional connection with its audience gives it a layer of value beyond financial metrics. Music is deeply ingrained in daily life—whether through personal enjoyment, media usage, or cultural events. This consistent demand can drive long-term value independent of market conditions, making music a unique investment with non-traditional drivers.
• Global Appeal and Expansion: Music's universal appeal, paired with the global expansion of digital platforms like Spotify, Apple Music, and YouTube, has made the market more robust than ever. As the music industry continues to grow globally, especially in emerging markets, its potential for returns as an asset remains strong.
  
  

A Quick Comparison: Real Estate and Music Royalties as Investments

Both real estate and music royalties can provide long-term income, but their characteristics differ significantly:

• Risk Diversification: Real estate is highly dependent on interest rates and market cycles
• Passive Income: While both may generate steady income, music royalties require little maintenance costs or property management.
  
  

Where Does MARS Come In?

We have established that music’s value as an asset lies in its cultural significance and consistent demand. Unlike traditional investments, music is not affected by economic crises. Even during recessions, the global music market has the ability to be resilient, making music a dependable and stable asset class for investors. We have compared it to real estate, but now let’s see how it compares to MARS.

MARS allow investors to diversify across multiple income streams tied to artists’ careers, such as:

• Recorded Music: Revenue from streaming and physical formats.
• Live Shows & Touring: Income from in-person and virtual concerts.
• Publishing: Royalties from written songs and melodies.
• Merchandise: Earnings from branded and exclusive artist merchandise.
• Endorsements & Ventures: Payments tied to artist collaborations or business ventures.

This diverse range of opportunities makes music a compelling investment—both financially and culturally.

MARS: A New Way to Invest in Music

Unlike traditional royalty investments, MARS connects fans and investors directly to artists, offering a deeper involvement in the music industry. With MARS, investors don’t just buy shares in music catalogs—they engage with artists themselves, gaining access to exclusive events, shareholder meetings, and real-time performance data.

By investing in music assets on MARS, investors gain exposure to a range of income streams tied to an artist’s career, from recorded music and publishing to live shows, merchandise, and endorsements.

Building More Than a Portfolio: The Case for Music Investments

Music has evolved into much more than just an art form—it's a legitimate asset that can be lucrative. Yet, it's rarely discussed in the context of non-correlated assets, even though its potential is undeniable. The rise of platforms like MARS is opening the door for investors to tap into this rapidly growing market, offering a chance to invest in something that has both financial and personal value.

In a world where people are increasingly seeking investments that align with their values, music provides the perfect opportunity. It's something we experience daily, from the tunes on our morning commute to the playlist that gets us through a rough day. Why not put your money where your heart is and support the artists who make our lives a little brighter? Do you remember when investing was about believing in a company’s fundamentals, when supporting a company’s vision truly mattered? With MARS, you’re not investing in just another financial asset—you’re investing in passion.

Footnotes

1 Correlation is often quantified using a correlation coefficient. A coefficient of 1.0 represents a perfect positive correlation, where two assets move in complete unison. Conversely, a coefficient of -1.0 indicates a perfect negative correlation, where one asset’s value rises as the other falls.

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Sources

1. https://ifpi-website-cms.s3.eu-west-2.amazonaws.com/IFPI_GMR_2024_State_of_the_Industry_db92a1c9c1.pdf
2. https://newsroom.spotify.com/2025-01-28/on-our-10-billion-milestone-and-a-decade-of-getting-the-world-to-value-music/#:~:text=GROWING https://www.forbes.com/home-improvement/internet/streaming-stats/

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