IWM vs VNQ: Correlation & Overlap
How closely do iShares Russell 2000 ETF (IWM) and Vanguard Real Estate ETF (VNQ) trade together? Their weekly returns over three years give a correlation of 0.70, which is strong. The two funds also share 5.6% of their portfolios by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are IWM and VNQ?
Over the past 3 years, IWM and VNQ moved with a correlation of 0.70, which is strong. Lately the two have drifted apart, with the 1-year correlation at 0.56 versus 0.70 over 3 years. Over 5 years the correlation is 0.75, and the annualized covariance of weekly returns is 230.8 %².
Among the 320 assets we track against IWM, VNQ ranks #43 by 3-year correlation. The last year tells two different stories: IWM led by 18.1 percentage points, +28.4% for IWM against +10.3% for VNQ. Across three years, the rolling one-year figure varied moderately, from 0.57 to 0.87.
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 VNQ: side by side
| IWM (iShares Russell 2000 ETF) | VNQ (Vanguard Real Estate ETF) | |
|---|---|---|
| 1-year return | +28.4% | +10.3% |
| 5-year return | +41.5% | +9.5% |
| Volatility (ann.) | 19.8% | 16.6% |
| Beta vs S&P 500 | 1.06 | 0.59 |
| Max drawdown (3Y) | -27.5% | -17.5% |
| Dividend yield | 0.91% | 3.51% |
| Expense ratio | 0.19% | 0.13% |
| Assets under management | $80.1B | $73.1B |
| Sector / category | ETF · US Small & Mid Cap | ETF · Real Estate |
IWM, iShares's Small Blend fund, carries $80.1B under management, 1757 holdings, a 0.19% expense ratio, a 0.91% trailing dividend yield. VNQ is a Real Estate fund from Vanguard: $73.1B under management, 140 holdings, a 0.13% expense ratio, a 3.51% trailing dividend yield.
Portfolio overlap between IWM and VNQ
The two portfolios are largely distinct. Weighing the shared positions, 5.6% of the two funds is identical, spread across 76 common holdings. That shared book is a large part of why the returns line up.
| Common holding | Weight in IWM | Weight in VNQ |
|---|---|---|
| CTRE | 0.28% | 0.49% |
| RHP | 0.27% | 0.42% |
| COMP | 0.26% | 0.40% |
| TRNO | 0.23% | 0.40% |
| EPRT | 0.21% | 0.34% |
| MAC | 0.21% | 0.35% |
| KRG | 0.17% | 0.30% |
| SBRA | 0.17% | 0.28% |
| OUT | 0.16% | 0.26% |
| PECO | 0.16% | 0.28% |
| CDP | 0.14% | 0.22% |
| BNL | 0.13% | 0.21% |
| SKT | 0.13% | 0.24% |
| SLG | 0.13% | 0.20% |
| APLE | 0.12% | 0.19% |
Largest positions held only by IWM: MOGA (0.35%), UMBF (0.34%), CYTK (0.33%), GKOS (0.33%), EAT (0.33%). Only by VNQ: VRTPX (14.54%), WELL (8.54%), PLD (7.04%), EQIX (5.25%), AMT (4.22%).
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 | VNQ |
|---|---|---|
| 2022 | -20.5% | -26.3% |
| 2023 | +16.8% | +11.9% |
| 2024 | +11.4% | +4.8% |
| 2025 | +12.7% | +3.2% |
| 2026 | +22.3% | +12.5% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are IWM and VNQ good diversifiers for each other?
Somewhat, no more. With 0.70 correlation, most large moves hit both names, and the diversification benefit stays modest.
FAQ
What is the correlation between IWM and VNQ?
As of 2026-08-27, the correlation of weekly returns between IWM and VNQ is 0.70 over 3 years, 0.56 over 1 year and 0.75 over 5 years.
Is VNQ a good diversifier for IWM?
Somewhat, no more. With 0.70 correlation, most large moves hit both names, and the diversification benefit stays modest.
How much do IWM and VNQ overlap?
Per the issuers' own portfolio disclosures (2026-08-26), the overlap is 5.6% by weight over 76 common positions.
Use this data
$ curl https://www.pairbook.io/api/v1/pairs/iwm-vs-vnq.json
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[](https://www.pairbook.io/pair/iwm-vs-vnq/)
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Related comparisons
Hubs: IWM correlations · VNQ correlations
