Nova/Ursa Ratio

DEFINITION of 'Nova/Ursa Ratio'

A sentiment indicator based on the Nova and Ursa funds from the Rydex Fund Group. The Nova fund is bullish with a target beta of 1.5. Whereas, the Ursa fund is bearish with a target beta of -1.0. This ratio can be used as a proxy for the direction of market sentiment. More specifically, a high value represents a bullish sentiment and a low value represents a bearish sentiment.

Calculated as:

Nova/Ursa Ratio

BREAKING DOWN 'Nova/Ursa Ratio'

For example, A beta of 1.5 means that Nova has a target of 150% of the S&P 500 Index. Ursa's -1.0 means it has a target performance inverse to the S&P 500 Index. That is, if the S&P 500 is down 10%, Ursa should be up 10%.

Rather than just measuring someone's opinion about market direction, this ratio shows where people actually are putting their money.

RELATED TERMS
  1. Beta

    Beta is a measure of the volatility, or systematic risk, of a ...
  2. High Beta Index

    An index composed of companies with high betas trading on the ...
  3. International Beta

    Better known as "global beta", international beta is a measure ...
  4. Smart Beta

    Smart beta defines a set of investment strategies that emphasize ...
  5. Unlevered Beta

    A type of metric that compares the risk of an unlevered company ...
  6. Portable Alpha

    A strategy in which portfolio managers separate alpha from beta ...
Related Articles
  1. Mutual Funds & ETFs

    Beta

    Beta
  2. Professionals

    Systematic And Unsystematic Risk

    Understanding these types of risks will help you make better investing and business decisions.
  3. Investing Basics

    Beta: Know The Risk

    Beta says something about price risk, but how much does it say about fundamental risk factors? Find out here.
  4. Fundamental Analysis

    High Beta – Low Beta Stocks Define Volatility Trades

    We compare the Beta values obtained from financial sources. Also, how to compute Beta using Excel.
  5. Personal Finance

    How To Calculate Beta Of A Private Company

    We explain two methods for calculating the beta of a private company.
  6. Investing Basics

    How AQR Places Bets Against Beta

    Learn how the bet against beta strategy is used by a large hedge fund to profit from a pricing anomaly in the stock market caused by high stock prices.
  7. Forex

    Understanding Beta

    Beta is a measure of volatility. Find out what this means and how it affects your portfolio.
  8. Mutual Funds & ETFs

    JPIN Overview: A Smart Beta ETF to Consider in 2016

    Discover a smart beta exchange-traded fund in the international equity category, and learn why this fund's strategy makes it a compelling investment.
  9. Investing Basics

    What is a Security Market Line?

    The security market line graphs the systematic risk versus return of the whole market at a certain time, and shows all risky marketable securities.
  10. Products and Investments

    Smart Beta ETFs: Understanding the Risks

    Smart Beta ETFs have grown in popularity in recent years. These are the risks that advisors and their clients need to understand.
RELATED FAQS
  1. How do I use the Nova/Ursa ratio?

    The Nova/Ursa ratio is a contrary indicator designed to gauge market sentiment among retail investors. The ratio gets its ... Read Answer >>
  2. How does beta measure a stock's market risk?

    Learn how beta is used to measure risk versus the stock market, and understand how it is calculated and used in the capital ... Read Answer >>
  3. What does a mutual fund's beta coefficient measure?

    Evaluate the risk associated with a particular mutual fund by determining its beta coefficient, which illustrates the fund's ... Read Answer >>
  4. What is the difference between a smart beta fund and an index fund?

    Learn about the differences between smart beta funds and index funds and how market capitalization is used to construct index ... Read Answer >>
  5. What's the difference between alpha and beta?

    Learn about alpha and beta, two very important technical risk ratios that investors use to evaluate relative performance, ... Read Answer >>
  6. Why should I register as a Limited Liability Company (LLC) if I am self-employed ...

    Understand the difference between a company's levered beta and unlevered beta. Learn how debt affects a company's levered ... Read Answer >>
Hot Definitions
  1. Goodwill

    An account that can be found in the assets portion of a company's balance sheet. Goodwill can often arise when one company ...
  2. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  3. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  4. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  5. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center