IWM vs MDY: Correlation & Overlap
How closely do iShares Russell 2000 ETF (IWM) and SPDR S&P MidCap 400 ETF (MDY) trade together? Their weekly returns over three years give a correlation of 0.95, which is very strong. The two funds also share 11.6% of their portfolios by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are IWM and MDY?
On 3 years of weekly data the IWM/MDY correlation comes out at 0.95, very strong, meaning they move nearly in lockstep. The relationship has been stable: the 1-year correlation (0.91) sits close to the 3-year figure. The 5-year figure is 0.96, and annualized covariance runs at 311.9 %².
In IWM's tracked universe of 320 assets, MDY sits right near the top at #1. Over the last 12 months IWM came out ahead by 10.1 percentage points (+28.4% against +18.3%). The rolling one-year correlation stayed in a tight band between 0.92 and 0.98 over the past three years, which points to a structural rather than episodic relationship.
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.
IWM vs MDY: side by side
| IWM (iShares Russell 2000 ETF) | MDY (SPDR S&P MidCap 400 ETF) | |
|---|---|---|
| 1-year return | +28.4% | +18.3% |
| 5-year return | +41.5% | +47.5% |
| Volatility (ann.) | 19.8% | 16.5% |
| Beta vs S&P 500 | 1.06 | 0.91 |
| Max drawdown (3Y) | -27.5% | -24.0% |
| Dividend yield | 0.91% | 1.02% |
| Expense ratio | 0.19% | 0.23% |
| Assets under management | $80.1B | $26.5B |
| Sector / category | ETF · US Small & Mid Cap | ETF · US Small & Mid Cap |
IWM is a Small Blend fund from iShares: $80.1B under management, 1757 holdings, a 0.19% expense ratio, a 0.91% trailing dividend yield. MDY, State Street Investment Management's Mid-Cap Blend fund, carries $26.5B under management, 400 holdings, a 0.23% expense ratio, a 1.02% trailing dividend yield.
Portfolio overlap between IWM and MDY
The two portfolios are largely distinct, with 79 holdings in common adding up to 11.6% of fund weight. Where correlation shows the co-movement, the overlap shows its source.
| Common holding | Weight in IWM | Weight in MDY |
|---|---|---|
| MOGA | 0.35% | 0.30% |
| CYTK | 0.33% | 0.29% |
| UMBF | 0.34% | 0.28% |
| BTSG | 0.31% | 0.27% |
| KRYS | 0.29% | 0.26% |
| CTRE | 0.28% | 0.26% |
| IDCC | 0.28% | 0.24% |
| ONB | 0.29% | 0.24% |
| HQY | 0.28% | 0.24% |
| FCFS | 0.29% | 0.23% |
| CMC | 0.24% | 0.21% |
| TEX | 0.24% | 0.20% |
| FLR | 0.23% | 0.20% |
| SLAB | 0.23% | 0.20% |
| ENS | 0.23% | 0.19% |
Largest positions held only by IWM: GKOS (0.33%), EAT (0.33%), FROG (0.32%), TWST (0.30%), PRAX (0.30%). Only by MDY: TWLO (0.95%), P (0.94%), ILMN (0.93%), FTI (0.83%), ATI (0.80%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-08-26. Top 15 common positions shown.
Year-by-year returns
| Year | IWM | MDY |
|---|---|---|
| 2022 | -20.5% | -13.3% |
| 2023 | +16.8% | +16.1% |
| 2024 | +11.4% | +13.6% |
| 2025 | +12.7% | +7.2% |
| 2026 | +22.3% | +16.4% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are IWM and MDY good diversifiers for each other?
No: a correlation of 0.95 means IWM and MDY tend to fall together, which is precisely when diversification is supposed to help.
FAQ
What is the correlation between IWM and MDY?
As of 2026-08-27, the correlation of weekly returns between IWM and MDY is 0.95 over 3 years, 0.91 over 1 year and 0.96 over 5 years.
Is MDY a good diversifier for IWM?
No: a correlation of 0.95 means IWM and MDY tend to fall together, which is precisely when diversification is supposed to help.
How much do IWM and MDY overlap?
The two funds share 79 holdings amounting to 11.6% of weight, per issuer portfolio files dated 2026-08-26.
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Hubs: IWM correlations · MDY correlations
