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.

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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 Full Answer >>
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    First of all, let's remember that bears are sluggish and bulls spirited and burly. The terms are used to describe general ... Read Full Answer >>
  3. Are we in a bull market or a bear market?

    A bull market is represented by a rising price trend, and a bear market is indicated by a falling price trend. Given this ... Read Full Answer >>
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    "Finance" is a broad term that describes two related activities: the study of how money is managed and the actual process ... Read Full Answer >>
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    The main benefit of target-date retirement funds is convenience. If you really don't want to bother with your retirement ... Read Full Answer >>
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