EFA vs XLE: Correlation & Overlap
iShares MSCI EAFE ETF (EFA) and Energy Select Sector SPDR Fund (XLE) show a weak relationship: their 3-year correlation of weekly returns is 0.13. 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 EFA and XLE?
On 3 years of weekly data the EFA/XLE correlation comes out at 0.13, weak. The past 12 months show a weaker link (-0.31) than the 3-year average (0.13). The 5-year figure is 0.22, and annualized covariance runs at 43.7 %².
Among the 109 assets we track against EFA, XLE ranks #99 by 3-year correlation. Correlation aside, the last 12 months split them widely, with XLE ahead by 22.1 points (+21.9% versus +44.0%). Do not treat this figure as fixed: across three years the rolling one-year correlation ranged all the way from -0.32 to 0.51. Risk is not evenly split, since XLE carries 1.6 times the volatility of the other side.
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.
EFA vs XLE: side by side
| EFA (iShares MSCI EAFE ETF) | XLE (Energy Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +21.9% | +44.0% |
| 5-year return | +56.7% | +206.7% |
| Volatility (ann.) | 14.9% | 23.1% |
| Beta vs S&P 500 | 0.77 | 0.27 |
| Max drawdown (3Y) | -14.1% | -20.1% |
| Dividend yield | 3.19% | 2.55% |
| Expense ratio | 0.32% | 0.08% |
| Assets under management | $78.0B | $39.2B |
| Sector / category | ETF · International | Sector ETF |
On the fund side, EFA sits in the Foreign Large Blend category at iShares, with $78.0B under management, 666 holdings, a 0.32% expense ratio, a 3.19% 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 EFA and XLE
The two portfolios are largely distinct. Weighing the shared positions, 0.1% of the two funds is identical, spread across 2 common holdings. That shared book is a large part of why the returns line up.
Largest positions held only by EFA: ASML (2.99%), HSBA (1.57%), ROP (1.42%), SAN (1.38%), NOVN (1.28%). 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 2 common positions shown.
Year-by-year returns
| Year | EFA | XLE |
|---|---|---|
| 2022 | -14.4% | +64.3% |
| 2023 | +18.4% | -0.6% |
| 2024 | +3.5% | +5.6% |
| 2025 | +31.5% | +7.9% |
| 2026 | +14.3% | +41.2% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are EFA and XLE good diversifiers for each other?
By historical standards, yes. A correlation of 0.13 means the two rarely move for the same reasons.
FAQ
What is the correlation between EFA and XLE?
As of 2026-08-27, the correlation of weekly returns between EFA and XLE is 0.13 over 3 years, -0.31 over 1 year and 0.22 over 5 years.
Is XLE a good diversifier for EFA?
By historical standards, yes. A correlation of 0.13 means the two rarely move for the same reasons.
How much do EFA and XLE overlap?
Per the issuers' own portfolio disclosures (2026-08-26), the overlap is 0.1% by weight over 2 common positions.
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Related comparisons
Hubs: EFA correlations · XLE correlations
