IWM vs VYM: Correlation & Overlap
iShares Russell 2000 ETF (IWM) and Vanguard High Dividend Yield ETF (VYM) show a very strong relationship: their 3-year correlation of weekly returns is 0.84. Looking through to holdings, 2.6% 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 VYM?
Over the past 3 years, IWM and VYM moved with a correlation of 0.84, which is very strong, meaning they move nearly in lockstep. The relationship has been stable: the 1-year correlation (0.74) sits close to the 3-year figure. Over 5 years the correlation is 0.83, and the annualized covariance of weekly returns is 205.1 %².
Among the 320 assets we track against IWM, VYM ranks #7 by 3-year correlation. Over the last 12 months IWM came out ahead by 7.3 percentage points (+28.4% against +21.1%). Stability stands out here, with the rolling one-year correlation confined to 0.74 through 0.91. One caveat on sizing: IWM is 1.6 times as volatile as the other leg, so an equal-dollar split is far from equal-risk.
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 VYM: side by side
| IWM (iShares Russell 2000 ETF) | VYM (Vanguard High Dividend Yield ETF) | |
|---|---|---|
| 1-year return | +28.4% | +21.1% |
| 5-year return | +41.5% | +76.6% |
| Volatility (ann.) | 19.8% | 12.3% |
| Beta vs S&P 500 | 1.06 | 0.69 |
| Max drawdown (3Y) | -27.5% | -14.5% |
| Dividend yield | 0.91% | 2.24% |
| Expense ratio | 0.19% | 0.04% |
| Assets under management | $80.1B | $99.2B |
| Sector / category | ETF · US Small & Mid Cap | ETF · Dividend |
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. VYM, Vanguard's Large Value fund, carries $99.2B under management, 604 holdings, a 0.04% expense ratio, a 2.24% trailing dividend yield.
Portfolio overlap between IWM and VYM
The two portfolios are largely distinct, with 192 holdings in common adding up to 2.6% of fund weight. Where correlation shows the co-movement, the overlap shows its source.
| Common holding | Weight in IWM | Weight in VYM |
|---|---|---|
| UMBF | 0.34% | 0.04% |
| ONB | 0.29% | 0.04% |
| FCFS | 0.29% | 0.03% |
| JXN | 0.26% | 0.03% |
| SM | 0.27% | 0.03% |
| TEX | 0.24% | 0.03% |
| PBF | 0.22% | 0.03% |
| VLY | 0.22% | 0.03% |
| UBSI | 0.20% | 0.03% |
| SWX | 0.21% | 0.03% |
| GBCI | 0.20% | 0.03% |
| GATX | 0.20% | 0.03% |
| HWC | 0.20% | 0.03% |
| AROC | 0.17% | 0.02% |
| AUB | 0.18% | 0.02% |
Largest positions held only by IWM: MOGA (0.35%), CYTK (0.33%), GKOS (0.33%), EAT (0.33%), FROG (0.32%). Only by VYM: AVGO (7.37%), JPM (3.83%), XOM (2.63%), JNJ (2.51%), CSCO (1.87%).
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 | VYM |
|---|---|---|
| 2022 | -20.5% | -0.4% |
| 2023 | +16.8% | +6.6% |
| 2024 | +11.4% | +17.6% |
| 2025 | +12.7% | +15.4% |
| 2026 | +22.3% | +15.9% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are IWM and VYM good diversifiers for each other?
No: a correlation of 0.84 means IWM and VYM tend to fall together, which is precisely when diversification is supposed to help.
FAQ
What is the correlation between IWM and VYM?
As of 2026-08-27, the correlation of weekly returns between IWM and VYM is 0.84 over 3 years, 0.74 over 1 year and 0.83 over 5 years.
Is VYM a good diversifier for IWM?
No: a correlation of 0.84 means IWM and VYM tend to fall together, which is precisely when diversification is supposed to help.
How much do IWM and VYM overlap?
The two funds share 192 holdings amounting to 2.6% of weight, per issuer portfolio files dated 2026-08-26.
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