BND vs SHY: Correlation
How closely do Vanguard Total Bond Market ETF (BND) and iShares 1-3 Year Treasury Bond ETF (SHY) trade together? Their weekly returns over three years give a correlation of 0.85, which is very strong.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are BND and SHY?
On 3 years of weekly data the BND/SHY correlation comes out at 0.85, very strong, meaning they move nearly in lockstep. The relationship has been stable: the 1-year correlation (0.85) sits close to the 3-year figure. The 5-year figure is 0.81, and annualized covariance runs at 6.9 %².
Among the 33 assets we track against BND, SHY ranks #6 by 3-year correlation. Their 12-month results are close: +2.3% for BND against +2.5% for SHY. Stability stands out here, with the rolling one-year correlation confined to 0.74 through 0.92. Note the risk asymmetry: BND runs 3.2 times the annualized volatility of the other leg, so equal-weighting the two is not an equal-risk position.
How is this computed?
Pearson correlation on weekly returns: ρ(A,B) = cov(rA, rB) / (σA · σB), over windows of 52, 156 and 260 weeks. Covariance is annualized (×52) and expressed in %². Full definitions on the methodology page.
BND vs SHY: side by side
| BND (Vanguard Total Bond Market ETF) | SHY (iShares 1-3 Year Treasury Bond ETF) | |
|---|---|---|
| 1-year return | +2.3% | +2.5% |
| 5-year return | -1.3% | +9.6% |
| Volatility (ann.) | 5.2% | 1.6% |
| Beta vs S&P 500 | 0.06 | 0.00 |
| Max drawdown (3Y) | -4.7% | -1.0% |
| Dividend yield | – | 3.65% |
| Expense ratio | – | 0.15% |
| Assets under management | – | $25.1B |
| Sector / category | ETF · Bonds | ETF · Bonds |
SHY, iShares's Short Government fund, carries $25.1B under management, a 0.15% expense ratio, a 3.65% trailing dividend yield.
Year-by-year returns
| Year | BND | SHY |
|---|---|---|
| 2022 | -13.1% | -3.9% |
| 2023 | +5.7% | +4.2% |
| 2024 | +1.4% | +3.9% |
| 2025 | +7.1% | +5.0% |
| 2026 | +0.2% | +1.1% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are BND and SHY good diversifiers for each other?
No. With a correlation of 0.85, BND and SHY move nearly in lockstep, so holding both adds very little diversification.
FAQ
What is the correlation between BND and SHY?
The BND/SHY correlation stands at 0.85 on a 3-year window (1 year: 0.85, 5 years: 0.81), computed from weekly returns as of 2026-08-27.
Is SHY a good diversifier for BND?
No. With a correlation of 0.85, BND and SHY move nearly in lockstep, so holding both adds very little diversification.
What does a correlation of 0.85 mean?
On the −1 to +1 scale, 0.85 describes how much the two returns move together: +1 is lockstep, 0 is independence, negative values mean opposite directions. It says nothing about which performed better.
Use this data
$ curl https://www.pairbook.io/api/v1/pairs/bnd-vs-shy.json
Drop this badge in a README or notebook; it updates with the data:
[](https://www.pairbook.io/pair/bnd-vs-shy/)
No key needed, free to use. Full endpoint list in the API documentation.
Related comparisons
Hubs: BND correlations · SHY correlations
