IWM vs VWO: Correlation & Overlap
How closely do iShares Russell 2000 ETF (IWM) and Vanguard FTSE Emerging Markets ETF (VWO) trade together? Their weekly returns over three years give a correlation of 0.61, which is strong. Looking through to holdings, 0.4% of the two portfolios is the same by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are IWM and VWO?
Over the past 3 years, IWM and VWO moved with a correlation of 0.61, which is strong. Recent behaviour matches the longer record: 0.71 over 1 year against 0.61 over 3. Over 5 years the correlation is 0.60, and the annualized covariance of weekly returns is 184.7 %².
Within IWM's tracked universe of 320 assets, VWO comes in at #110 by 3-year correlation. On 12-month performance IWM holds a 6.8-point edge, +28.4% against +21.6%. The rolling one-year correlation moved between 0.37 and 0.79 over the past three years, a moderate range.
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 VWO: side by side
| IWM (iShares Russell 2000 ETF) | VWO (Vanguard FTSE Emerging Markets ETF) | |
|---|---|---|
| 1-year return | +28.4% | +21.6% |
| 5-year return | +41.5% | +38.2% |
| Volatility (ann.) | 19.8% | 15.2% |
| Beta vs S&P 500 | 1.06 | 0.75 |
| Max drawdown (3Y) | -27.5% | -17.4% |
| Dividend yield | 0.91% | 2.36% |
| Expense ratio | 0.19% | 0.06% |
| Assets under management | $80.1B | $162.0B |
| Sector / category | ETF · US Small & Mid Cap | ETF · International |
On the fund side, IWM sits in the Small Blend category at iShares, with $80.1B under management, 1757 holdings, a 0.19% expense ratio, a 0.91% trailing dividend yield. On the fund side, VWO sits in the Diversified Emerging Mkts category at Vanguard, with $162.0B under management, 4113 holdings, a 0.06% expense ratio, a 2.36% trailing dividend yield.
Portfolio overlap between IWM and VWO
The two portfolios are largely distinct: 0.4% of the funds' weight sits in the same underlying holdings (17 common positions). Correlation tells you they move together; overlap tells you why.
| Common holding | Weight in IWM | Weight in VWO |
|---|---|---|
| VAL | 0.15% | 0.21% |
| ABG | 0.13% | 0.11% |
| OUT | 0.16% | 0.05% |
| HTO | 0.07% | 0.04% |
| AMR | 0.07% | 0.02% |
| RES | 0.02% | 0.02% |
| MTH | 0.15% | 0.01% |
| STC | 0.07% | 0.01% |
| BOX | 0.14% | 0.01% |
| KRT | 0.01% | 0.01% |
| HCC | 0.18% | 0.00% |
| DMC | 0.03% | 0.00% |
| SFL | 0.05% | 0.00% |
| PLUS | 0.07% | 0.00% |
| CTOS | 0.02% | 0.00% |
Largest positions held only by IWM: MOGA (0.35%), UMBF (0.34%), CYTK (0.33%), GKOS (0.33%), EAT (0.33%). Only by VWO: 2330 (18.65%), 700 (3.97%), 9988 (2.90%), 2454 (1.62%), 939 (1.07%).
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 | VWO |
|---|---|---|
| 2022 | -20.5% | -18.0% |
| 2023 | +16.8% | +9.3% |
| 2024 | +11.4% | +10.6% |
| 2025 | +12.7% | +25.6% |
| 2026 | +22.3% | +13.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are IWM and VWO good diversifiers for each other?
Only partially. A correlation of 0.61 means IWM and VWO 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 VWO?
As of 2026-08-27, the correlation of weekly returns between IWM and VWO is 0.61 over 3 years, 0.71 over 1 year and 0.60 over 5 years.
Is VWO a good diversifier for IWM?
Only partially. A correlation of 0.61 means IWM and VWO share most of their swings. Pairing them dampens volatility somewhat, but it will not protect against a common drawdown.
How much do IWM and VWO overlap?
0.4% by weight, across 17 common holdings, based on issuer-disclosed portfolios as of 2026-08-26.
Use this data
$ curl https://www.pairbook.io/api/v1/pairs/iwm-vs-vwo.json
Drop this badge in a README or notebook; it updates with the data:
[](https://www.pairbook.io/pair/iwm-vs-vwo/)
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Related comparisons
Hubs: IWM correlations · VWO correlations
