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. 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. Managing Wealth

    Beta: Know The Risk

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

    High Beta – Low Beta Stocks Define Volatility Trades

    We compare the Beta values obtained from financial sources. Also, how to compute Beta using Excel.
  3. Managing Wealth

    How To Calculate Beta Of A Private Company

    We explain two methods for calculating the beta of a private company.
  4. ETFs & Mutual Funds

    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.
  5. Managing Wealth

    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.
  6. Trading

    Understanding Beta

    Beta is a measure of volatility. Find out what this means and how it affects your portfolio.
  7. Markets

    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. ETFs & Mutual Funds

    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. ETFs & Mutual Funds

    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.
  10. Managing Wealth

    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.
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. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  2. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  3. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  4. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  5. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  6. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
Trading Center