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. Unlevered Beta

    A type of metric that compares the risk of an unlevered company ...
  5. Smart Beta

    Smart beta defines a set of investment strategies that emphasize ...
  6. Smart Beta ETF

    Smart Beta ETF is a type of exchange-traded fund that uses alternative ...
Related Articles
  1. Investing

    Beta: Gauging Price Fluctuations

    Learn how to properly use this measure that can help you meet your criteria for risk.
  2. Investing

    Beta: Know The Risk

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

    High Beta – Low Beta Stocks Define Volatility Trades

    We compare the Beta values obtained from financial sources. Also, how to compute Beta using Excel.
  4. Investing

    How To Calculate Beta Of A Private Company

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

    3 Ways to Assess Smart Beta Fees

    Explore three ways to asses the expense ratios of smart beta ETFs, including comparisons with passive funds, within the smart beta category and tradings costs.
  6. Investing

    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. Investing

    3 Cases When Beta Does Not Measure Volatility of Stocks

    Examine the theoretical and statistical relationship between beta and volatility to identify three factors that limit beta's explanatory value.
  8. Investing

    Smart Beta ETF Myths and Misconceptions

    Discover smart beta exchange-traded funds (ETFs), and learn about some of the common misconceptions and characteristics of this type of product.
  9. Investing

    Understanding Volatility Measurements

    How do you choose a fund with an optimal risk-reward combination? We teach you about standard deviation, beta and more!
  10. Financial Advisor

    Calculating Beta: Portfolio Math For The Average Investor

    Beta is a useful tool for calculating risk, but the formulas provided online aren't specific to you. Learn how to make your own.
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?

    Smart beta funds and index funds differ in how they are constructed. 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 >>
Hot Definitions
  1. IRS Publication 970

    A document published by the Internal Revenue Service (IRS) that provides information on tax benefits available to students ...
  2. Federal Direct Loan Program

    A program that provides low-interest loans to postsecondary students and their parents. The William D. Ford Federal Direct ...
  3. Cash Flow

    The net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's ...
  4. PLUS Loan

    A low-cost student loan offered to parents of students currently enrolled in post-secondary education. With a PLUS Loan, ...
  5. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  6. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
Trading Center