EEM vs XLP: Correlation & Overlap
How closely do iShares MSCI Emerging Markets ETF (EEM) and Consumer Staples Select Sector SPDR Fund (XLP) trade together? Their weekly returns over three years give a correlation of 0.24, which is weak. Looking through to holdings, 0% 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 XLP?
Over the past 3 years, EEM and XLP moved with a correlation of 0.24, which is weak. Lately the two have drifted apart, with the 1-year correlation at 0.12 versus 0.24 over 3 years. Over 5 years the correlation is 0.28, and the annualized covariance of weekly returns is 48.4 %².
Within EEM's tracked universe of 67 assets, XLP comes in at #56 by 3-year correlation. The last year tells two different stories: EEM led by 29.8 percentage points, +38.1% for EEM against +8.3% for XLP. Across three years, the rolling one-year figure varied moderately, from 0.13 to 0.47. One caveat on sizing: EEM is 1.6 times as volatile as the other leg, so an equal-dollar split is far from equal-risk.
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 XLP: side by side
| EEM (iShares MSCI Emerging Markets ETF) | XLP (Consumer Staples Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +38.1% | +8.3% |
| 5-year return | +47.1% | +34.7% |
| Volatility (ann.) | 18.0% | 11.1% |
| Beta vs S&P 500 | 0.85 | 0.23 |
| Max drawdown (3Y) | -17.3% | -9.7% |
| Dividend yield | 1.73% | 2.58% |
| Expense ratio | 0.72% | 0.08% |
| Assets under management | $29.2B | $14.6B |
| Sector / category | ETF · International | Sector ETF |
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. On the fund side, XLP sits in the Consumer Defensive category at State Street Investment Management, with $14.6B under management, 35 holdings, a 0.08% expense ratio, a 2.58% trailing dividend yield.
Portfolio overlap between EEM and XLP
The two portfolios are largely distinct. Weighing the shared positions, 0% of the two funds is identical, spread across 0 common holdings. That shared book is a large part of why the returns line up.
Largest positions held only by EEM: 2330 (15.14%), 005930 (7.15%), 000660 (5.45%), 700 (2.83%), 9988 (2.02%). Only by XLP: WMT (9.62%), COST (8.92%), KO (7.34%), PG (7.10%), PM (6.36%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-08-26.
Year-by-year returns
| Year | EEM | XLP |
|---|---|---|
| 2022 | -20.6% | -0.8% |
| 2023 | +8.9% | -0.8% |
| 2024 | +6.5% | +12.2% |
| 2025 | +34.0% | +1.5% |
| 2026 | +24.2% | +10.9% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are EEM and XLP good diversifiers for each other?
Yes, to a useful degree: a correlation of 0.24 leaves real independence between the two, which historically damped combined volatility.
FAQ
What is the correlation between EEM and XLP?
As of 2026-08-27, the correlation of weekly returns between EEM and XLP is 0.24 over 3 years, 0.12 over 1 year and 0.28 over 5 years.
Is XLP a good diversifier for EEM?
Yes, to a useful degree: a correlation of 0.24 leaves real independence between the two, which historically damped combined volatility.
How much do EEM and XLP overlap?
The two funds share 0 holdings amounting to 0% of weight, per issuer portfolio files dated 2026-08-26.
Use this data
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Related comparisons
Hubs: EEM correlations · XLP correlations
