EEM vs XLE: Correlation & Overlap
How closely do iShares MSCI Emerging Markets ETF (EEM) and Energy Select Sector SPDR Fund (XLE) trade together? Their weekly returns over three years give a correlation of 0.03, which is near-zero. By holdings, the two funds overlap 0.1% by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are EEM and XLE?
Over the past 3 years, EEM and XLE moved with a correlation of 0.03, which is near zero, meaning they move largely independently. The link has loosened recently: the 1-year correlation (-0.36) runs below the 3-year figure (0.03). Over 5 years the correlation is 0.13, and the annualized covariance of weekly returns is 11.4 %².
By 3-year correlation, XLE places #57 of the 67 assets tracked against EEM. Over the last 12 months XLE came out ahead by 5.9 percentage points (+38.1% against +44.0%). This link changes with the market regime, having swung between -0.39 and 0.42 on a rolling one-year basis.
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 XLE: side by side
| EEM (iShares MSCI Emerging Markets ETF) | XLE (Energy Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +38.1% | +44.0% |
| 5-year return | +47.1% | +206.7% |
| Volatility (ann.) | 18.0% | 23.1% |
| Beta vs S&P 500 | 0.85 | 0.27 |
| Max drawdown (3Y) | -17.3% | -20.1% |
| Dividend yield | 1.73% | 2.55% |
| Expense ratio | 0.72% | 0.08% |
| Assets under management | $29.2B | $39.2B |
| Sector / category | ETF · International | Sector ETF |
EEM is a Diversified Emerging Mkts fund from iShares: $29.2B under management, 968 holdings, a 0.72% expense ratio, a 1.73% trailing dividend yield. XLE is an Equity Energy fund from State Street Investment Management: $39.2B under management, 22 holdings, a 0.08% expense ratio, a 2.55% trailing dividend yield.
Portfolio overlap between EEM and XLE
The two portfolios are largely distinct, with 1 holdings in common adding up to 0.1% of fund weight. Where correlation shows the co-movement, the overlap shows its source.
| Common holding | Weight in EEM | Weight in XLE |
|---|---|---|
| HAL | 0.07% | 1.71% |
Largest positions held only by EEM: 2330 (15.14%), 005930 (7.15%), 000660 (5.45%), 700 (2.83%), 9988 (2.02%). Only by XLE: XOM (20.03%), CVX (14.84%), COP (6.30%), MPC (5.40%), PSX (5.37%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-08-26. Top 1 common positions shown.
Year-by-year returns
| Year | EEM | XLE |
|---|---|---|
| 2022 | -20.6% | +64.3% |
| 2023 | +8.9% | -0.6% |
| 2024 | +6.5% | +5.6% |
| 2025 | +34.0% | +7.9% |
| 2026 | +24.2% | +41.2% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are EEM and XLE good diversifiers for each other?
Yes. With a correlation of 0.03, EEM and XLE have moved largely independently, which makes them a genuinely diversifying pair by historical standards.
FAQ
What is the correlation between EEM and XLE?
Using weekly returns as of 2026-08-27: 0.03 over 3 years, with -0.36 over the last year and 0.13 over 5 years.
Is XLE a good diversifier for EEM?
Yes. With a correlation of 0.03, EEM and XLE have moved largely independently, which makes them a genuinely diversifying pair by historical standards.
How much do EEM and XLE overlap?
The two funds share 1 holdings amounting to 0.1% of weight, per issuer portfolio files dated 2026-08-26.
Use this data
$ curl https://www.pairbook.io/api/v1/pairs/eem-vs-xle.json
Markdown for the live badge, attribution link included:
[](https://www.pairbook.io/pair/eem-vs-xle/)
Free with attribution; caching and terms are described in the API documentation.
Related comparisons
Hubs: EEM correlations · XLE correlations
