IEFA vs XLE: Correlation & Overlap
Measured on weekly returns over the past three years, iShares Core MSCI EAFE ETF (IEFA) and Energy Select Sector SPDR Fund (XLE) carry a correlation of 0.12, a weak link. The two funds also share 0.1% of their portfolios by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are IEFA and XLE?
Across a 3-year window, the weekly returns of IEFA and XLE correlate at 0.12, weak. The past 12 months show a weaker link (-0.32) than the 3-year average (0.12). Stretching to 5 years gives 0.22, with an annualized covariance of 42.9 %².
By 3-year correlation, XLE places #101 of the 111 assets tracked against IEFA. Their recent paths diverged sharply: over the last 12 months XLE outperformed by 22.2 percentage points (+21.8% for IEFA against +44.0% for XLE). Do not treat this figure as fixed: across three years the rolling one-year correlation ranged all the way from -0.33 to 0.51. Risk is not evenly split, since XLE carries 1.5 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.
IEFA vs XLE: side by side
| IEFA (iShares Core MSCI EAFE ETF) | XLE (Energy Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +21.8% | +44.0% |
| 5-year return | +54.5% | +206.7% |
| Volatility (ann.) | 15.0% | 23.1% |
| Beta vs S&P 500 | 0.77 | 0.27 |
| Max drawdown (3Y) | -13.8% | -20.1% |
| Dividend yield | 3.35% | 2.55% |
| Expense ratio | 0.07% | 0.08% |
| Assets under management | $190.1B | $39.2B |
| Sector / category | ETF · International | Sector ETF |
IEFA, iShares's Foreign Large Blend fund, carries $190.1B under management, 1620 holdings, a 0.07% expense ratio, a 3.35% 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 IEFA 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 IEFA: ASML (2.57%), HSBA (1.35%), ROP (1.22%), SAN (1.17%), NOVN (1.10%). 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 | IEFA | XLE |
|---|---|---|
| 2022 | -15.2% | +64.3% |
| 2023 | +18.0% | -0.6% |
| 2024 | +3.3% | +5.6% |
| 2025 | +32.1% | +7.9% |
| 2026 | +14.5% | +41.2% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are IEFA and XLE good diversifiers for each other?
Yes: at 0.12, the two have gone their own ways historically, which is what genuine diversification looks like.
FAQ
What is the correlation between IEFA and XLE?
As of 2026-08-27, the correlation of weekly returns between IEFA and XLE is 0.12 over 3 years, -0.32 over 1 year and 0.22 over 5 years.
Is XLE a good diversifier for IEFA?
Yes: at 0.12, the two have gone their own ways historically, which is what genuine diversification looks like.
How much do IEFA and XLE overlap?
0.1% by weight, across 2 common holdings, based on issuer-disclosed portfolios as of 2026-08-26.
Use this data
$ curl https://www.pairbook.io/api/v1/pairs/iefa-vs-xle.json
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Hubs: IEFA correlations · XLE correlations
