EWJ vs XLF: Correlation & Overlap
How closely do iShares MSCI Japan ETF (EWJ) and Financial Select Sector SPDR Fund (XLF) trade together? Their weekly returns over three years give a correlation of 0.50, which is moderate. The two funds also share 0% of their portfolios by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are EWJ and XLF?
On 3 years of weekly data the EWJ/XLF correlation comes out at 0.50, moderate. The past 12 months show a weaker link (0.27) than the 3-year average (0.50). The 5-year figure is 0.55, and annualized covariance runs at 157.5 %².
Among the 70 assets we track against EWJ, XLF ranks #46 by 3-year correlation. The last year tells two different stories: EWJ led by 17.8 percentage points, +27.1% for EWJ against +9.3% for XLF. On a rolling one-year basis the correlation drifted between 0.24 and 0.72, 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.
EWJ vs XLF: side by side
| EWJ (iShares MSCI Japan ETF) | XLF (Financial Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +27.1% | +9.3% |
| 5-year return | +58.6% | +64.2% |
| Volatility (ann.) | 19.6% | 16.2% |
| Beta vs S&P 500 | 0.94 | 0.84 |
| Max drawdown (3Y) | -14.7% | -15.5% |
| Dividend yield | 3.86% | 1.42% |
| Expense ratio | 0.49% | 0.08% |
| Assets under management | $21.8B | $57.9B |
| Sector / category | ETF · International | Sector ETF |
EWJ is a Japan Stock fund from iShares: $21.8B under management, 168 holdings, a 0.49% expense ratio, a 3.86% 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 EWJ and XLF
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 EWJ: 8306 (4.56%), 7203 (3.47%), 6857 (3.12%), 8035 (2.97%), 8316 (2.92%). 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.
Year-by-year returns
| Year | EWJ | XLF |
|---|---|---|
| 2022 | -17.7% | -10.6% |
| 2023 | +20.3% | +12.0% |
| 2024 | +7.0% | +30.6% |
| 2025 | +25.8% | +14.9% |
| 2026 | +19.3% | +6.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are EWJ and XLF good diversifiers for each other?
Only partially. A correlation of 0.50 means EWJ and XLF share most of their swings. Pairing them dampens volatility somewhat, but it will not protect against a common drawdown.
FAQ
What is the correlation between EWJ and XLF?
Using weekly returns as of 2026-08-27: 0.50 over 3 years, with 0.27 over the last year and 0.55 over 5 years.
Is XLF a good diversifier for EWJ?
Only partially. A correlation of 0.50 means EWJ and XLF share most of their swings. Pairing them dampens volatility somewhat, but it will not protect against a common drawdown.
How much do EWJ and XLF overlap?
Per the issuers' own portfolio disclosures (2026-08-26), the overlap is 0% by weight over 0 common positions.
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