EFA vs XLF: Correlation & Overlap
Measured on weekly returns over the past three years, iShares MSCI EAFE ETF (EFA) and Financial Select Sector SPDR Fund (XLF) carry a correlation of 0.60, a strong link. Looking through to holdings, 0.4% 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 EFA and XLF?
Across a 3-year window, the weekly returns of EFA and XLF correlate at 0.60, strong. The past 12 months show a weaker link (0.48) than the 3-year average (0.60). Stretching to 5 years gives 0.70, with an annualized covariance of 145.4 %².
Among the 109 assets we track against EFA, XLF ranks #65 by 3-year correlation. Over the last 12 months EFA came out ahead by 12.6 percentage points (+21.9% against +9.3%). On a rolling one-year basis the correlation drifted between 0.36 and 0.82, a moderate band.
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 XLF: side by side
| EFA (iShares MSCI EAFE ETF) | XLF (Financial Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +21.9% | +9.3% |
| 5-year return | +56.7% | +64.2% |
| Volatility (ann.) | 14.9% | 16.2% |
| Beta vs S&P 500 | 0.77 | 0.84 |
| Max drawdown (3Y) | -14.1% | -15.5% |
| Dividend yield | 3.19% | 1.42% |
| Expense ratio | 0.32% | 0.08% |
| Assets under management | $78.0B | $57.9B |
| Sector / category | ETF · International | Sector ETF |
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. XLF is a Financial fund from State Street Investment Management: $57.9B under management, 77 holdings, a 0.08% expense ratio, a 1.42% trailing dividend yield.
Portfolio overlap between EFA and XLF
The two portfolios are largely distinct, with 3 holdings in common adding up to 0.4% of fund weight. Where correlation shows the co-movement, the overlap shows its source.
Largest positions held only by EFA: ASML (2.99%), HSBA (1.57%), ROP (1.42%), SAN (1.38%), NOVN (1.28%). Only by XLF: JPM (11.61%), BRK.B (11.25%), V (7.74%), MA (5.87%), BAC (4.94%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-08-26. Top 3 common positions shown.
Year-by-year returns
| Year | EFA | XLF |
|---|---|---|
| 2022 | -14.4% | -10.6% |
| 2023 | +18.4% | +12.0% |
| 2024 | +3.5% | +30.6% |
| 2025 | +31.5% | +14.9% |
| 2026 | +14.3% | +6.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are EFA and XLF good diversifiers for each other?
To a limited degree. At 0.60 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 EFA and XLF?
As of 2026-08-27, the correlation of weekly returns between EFA and XLF is 0.60 over 3 years, 0.48 over 1 year and 0.70 over 5 years.
Is XLF a good diversifier for EFA?
To a limited degree. At 0.60 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 EFA and XLF overlap?
0.4% by weight, across 3 common holdings, based on issuer-disclosed portfolios as of 2026-08-26.
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Hubs: EFA correlations · XLF correlations
