IEFA vs XLY: Correlation & Overlap
iShares Core MSCI EAFE ETF (IEFA) and Consumer Discretionary Select Sector SPDR Fund (XLY) show a strong relationship: their 3-year correlation of weekly returns is 0.64. By holdings, the two funds overlap 0.2% by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are IEFA and XLY?
Over the past 3 years, IEFA and XLY moved with a correlation of 0.64, which is strong. Little has changed lately, as the 1-year reading of 0.66 lands near the 3-year figure. Over 5 years the correlation is 0.69, and the annualized covariance of weekly returns is 187.8 %².
Among the 111 assets we track against IEFA, XLY ranks #53 by 3-year correlation. Their recent paths diverged sharply: over the last 12 months IEFA outperformed by 21.9 percentage points (+21.8% for IEFA against -0.1% for XLY). On a rolling one-year basis the correlation drifted between 0.49 and 0.76, 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.
IEFA vs XLY: side by side
| IEFA (iShares Core MSCI EAFE ETF) | XLY (Consumer Discretionary Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +21.8% | -0.1% |
| 5-year return | +54.5% | +31.8% |
| Volatility (ann.) | 15.0% | 19.7% |
| Beta vs S&P 500 | 0.77 | 1.15 |
| Max drawdown (3Y) | -13.8% | -26.0% |
| Dividend yield | 3.35% | 0.78% |
| Expense ratio | 0.07% | 0.08% |
| Assets under management | $190.1B | $22.5B |
| Sector / category | ETF · International | Sector ETF |
On the fund side, IEFA sits in the Foreign Large Blend category at iShares, with $190.1B under management, 1620 holdings, a 0.07% expense ratio, a 3.35% trailing dividend yield. XLY is a Consumer Cyclical fund from State Street Investment Management: $22.5B under management, 47 holdings, a 0.08% expense ratio, a 0.78% trailing dividend yield.
Portfolio overlap between IEFA and XLY
The two portfolios are largely distinct. Weighing the shared positions, 0.2% of the two funds is identical, spread across 4 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 XLY: AMZN (24.32%), TSLA (16.18%), HD (5.54%), MCD (4.11%), BKNG (4.04%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-08-26. Top 4 common positions shown.
Year-by-year returns
| Year | IEFA | XLY |
|---|---|---|
| 2022 | -15.2% | -36.3% |
| 2023 | +18.0% | +39.6% |
| 2024 | +3.3% | +26.5% |
| 2025 | +32.1% | +7.4% |
| 2026 | +14.5% | -2.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are IEFA and XLY good diversifiers for each other?
Only partially. A correlation of 0.64 means IEFA and XLY 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 IEFA and XLY?
The IEFA/XLY correlation stands at 0.64 on a 3-year window (1 year: 0.66, 5 years: 0.69), computed from weekly returns as of 2026-08-27.
Is XLY a good diversifier for IEFA?
Only partially. A correlation of 0.64 means IEFA and XLY share most of their swings. Pairing them dampens volatility somewhat, but it will not protect against a common drawdown.
How much do IEFA and XLY overlap?
The two funds share 4 holdings amounting to 0.2% of weight, per issuer portfolio files dated 2026-08-26.
Use this data
$ curl https://www.pairbook.io/api/v1/pairs/iefa-vs-xly.json
Markdown for the live badge, attribution link included:
[](https://www.pairbook.io/pair/iefa-vs-xly/)
Free with attribution; caching and terms are described in the API documentation.
Related comparisons
Hubs: IEFA correlations · XLY correlations
