IWM vs VEA: Correlation & Overlap
How closely do iShares Russell 2000 ETF (IWM) and Vanguard FTSE Developed Markets ETF (VEA) trade together? Their weekly returns over three years give a correlation of 0.72, which is strong. By holdings, the two funds overlap 1.7% by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are IWM and VEA?
Across a 3-year window, the weekly returns of IWM and VEA correlate at 0.72, strong. Little has changed lately, as the 1-year reading of 0.76 lands near the 3-year figure. Stretching to 5 years gives 0.77, with an annualized covariance of 215.6 %².
By 3-year correlation, VEA places #34 of the 320 assets tracked against IWM. Neither side won the trailing year by much: +28.4% against +28.5%. Stability stands out here, with the rolling one-year correlation confined to 0.60 through 0.84.
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 VEA: side by side
| IWM (iShares Russell 2000 ETF) | VEA (Vanguard FTSE Developed Markets ETF) | |
|---|---|---|
| 1-year return | +28.4% | +28.5% |
| 5-year return | +41.5% | +63.5% |
| Volatility (ann.) | 19.8% | 15.1% |
| Beta vs S&P 500 | 1.06 | 0.79 |
| Max drawdown (3Y) | -27.5% | -13.5% |
| Dividend yield | 0.91% | 2.56% |
| Expense ratio | 0.19% | 0.03% |
| Assets under management | $80.1B | $314.9B |
| Sector / category | ETF · US Small & Mid Cap | ETF · International |
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. VEA is a Foreign Large Blend fund from Vanguard: $314.9B under management, 3769 holdings, a 0.03% expense ratio, a 2.56% trailing dividend yield.
Portfolio overlap between IWM and VEA
The two portfolios are largely distinct: 1.7% of the funds' weight sits in the same underlying holdings (82 common positions). Correlation tells you they move together; overlap tells you why.
| Common holding | Weight in IWM | Weight in VEA |
|---|---|---|
| AIR | 0.17% | 0.43% |
| CNR | 0.16% | 0.22% |
| ORA | 0.20% | 0.13% |
| MC | 0.12% | 0.43% |
| NG | 0.10% | 0.26% |
| UCB | 0.13% | 0.10% |
| MTX | 0.07% | 0.07% |
| ACA | 0.23% | 0.06% |
| TRN | 0.07% | 0.05% |
| FBK | 0.08% | 0.05% |
| NN | 0.05% | 0.08% |
| AI | 0.04% | 0.13% |
| ARX | 0.04% | 0.04% |
| ENR | 0.04% | 0.41% |
| SIG | 0.10% | 0.03% |
Largest positions held only by IWM: MOGA (0.35%), UMBF (0.34%), CYTK (0.33%), GKOS (0.33%), EAT (0.33%). Only by VEA: 005930 (2.53%), ASML (2.00%), 000660 (1.98%), HSBA (1.15%), ROP (0.97%).
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 | VEA |
|---|---|---|
| 2022 | -20.5% | -15.3% |
| 2023 | +16.8% | +17.9% |
| 2024 | +11.4% | +3.1% |
| 2025 | +12.7% | +35.2% |
| 2026 | +22.3% | +18.3% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are IWM and VEA good diversifiers for each other?
Only partially. A correlation of 0.72 means IWM and VEA 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 IWM and VEA?
As of 2026-08-27, the correlation of weekly returns between IWM and VEA is 0.72 over 3 years, 0.76 over 1 year and 0.77 over 5 years.
Is VEA a good diversifier for IWM?
Only partially. A correlation of 0.72 means IWM and VEA share most of their swings. Pairing them dampens volatility somewhat, but it will not protect against a common drawdown.
How much do IWM and VEA overlap?
Per the issuers' own portfolio disclosures (2026-08-26), the overlap is 1.7% by weight over 82 common positions.
Use this data
$ curl https://www.pairbook.io/api/v1/pairs/iwm-vs-vea.json
Markdown for the live badge, attribution link included:
[](https://www.pairbook.io/pair/iwm-vs-vea/)
The core API is free. Terms and every endpoint in the API documentation.
Related comparisons
Hubs: IWM correlations · VEA correlations
