EEM vs EFA: Correlation & Overlap
How closely do iShares MSCI Emerging Markets ETF (EEM) and iShares MSCI EAFE ETF (EFA) trade together? Their weekly returns over three years give a correlation of 0.79, which is strong. Looking through to holdings, 0.3% of the two portfolios is the same by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are EEM and EFA?
Across a 3-year window, the weekly returns of EEM and EFA correlate at 0.79, strong. Recent behaviour matches the longer record: 0.80 over 1 year against 0.79 over 3. Stretching to 5 years gives 0.79, with an annualized covariance of 211.2 %².
By 3-year correlation, EFA places #8 of the 67 assets tracked against EEM. Their recent paths diverged sharply: over the last 12 months EEM outperformed by 16.2 percentage points (+38.1% for EEM against +21.9% for EFA). The link looks structural: the rolling one-year correlation barely moved, holding between 0.72 and 0.88.
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.
EEM vs EFA: side by side
| EEM (iShares MSCI Emerging Markets ETF) | EFA (iShares MSCI EAFE ETF) | |
|---|---|---|
| 1-year return | +38.1% | +21.9% |
| 5-year return | +47.1% | +56.7% |
| Volatility (ann.) | 18.0% | 14.9% |
| Beta vs S&P 500 | 0.85 | 0.77 |
| Max drawdown (3Y) | -17.3% | -14.1% |
| Dividend yield | 1.73% | 3.19% |
| Expense ratio | 0.72% | 0.32% |
| Assets under management | $29.2B | $78.0B |
| Sector / category | ETF · International | ETF · International |
EEM, iShares's Diversified Emerging Mkts fund, carries $29.2B under management, 968 holdings, a 0.72% expense ratio, a 1.73% trailing dividend yield. EFA is a Foreign Large Blend fund from iShares: $78.0B under management, 666 holdings, a 0.32% expense ratio, a 3.19% trailing dividend yield.
Portfolio overlap between EEM and EFA
The two portfolios are largely distinct. Weighing the shared positions, 0.3% of the two funds is identical, spread across 9 common holdings. That shared book is a large part of why the returns line up.
| Common holding | Weight in EEM | Weight in EFA |
|---|---|---|
| DSY | 0.07% | 0.08% |
| 1801 | 0.16% | 0.05% |
| VOD | 0.05% | 0.13% |
| SOL | 0.05% | 0.05% |
| 2801 | 0.04% | 0.03% |
| 7203 | 0.03% | 0.81% |
| AC | 0.02% | 0.05% |
| TEL | 0.01% | 0.04% |
| 7202 | 0.01% | 0.03% |
Largest positions held only by EEM: 2330 (15.14%), 005930 (7.15%), 000660 (5.45%), 700 (2.83%), 9988 (2.02%). Only by EFA: ASML (2.99%), HSBA (1.57%), ROP (1.42%), SAN (1.38%), NOVN (1.28%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-08-26. Top 9 common positions shown.
Year-by-year returns
| Year | EEM | EFA |
|---|---|---|
| 2022 | -20.6% | -14.4% |
| 2023 | +8.9% | +18.4% |
| 2024 | +6.5% | +3.5% |
| 2025 | +34.0% | +31.5% |
| 2026 | +24.2% | +14.3% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are EEM and EFA good diversifiers for each other?
To a limited degree. At 0.79 the two still catch most of the same waves, so the pair smooths returns a little without insulating either from a shared selloff.
FAQ
What is the correlation between EEM and EFA?
The EEM/EFA correlation stands at 0.79 on a 3-year window (1 year: 0.80, 5 years: 0.79), computed from weekly returns as of 2026-08-27.
Is EFA a good diversifier for EEM?
To a limited degree. At 0.79 the two still catch most of the same waves, so the pair smooths returns a little without insulating either from a shared selloff.
How much do EEM and EFA overlap?
0.3% by weight, across 9 common holdings, based on issuer-disclosed portfolios as of 2026-08-26.
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Related comparisons
Hubs: EEM correlations · EFA correlations
