IWM vs XLB: Correlation & Overlap
iShares Russell 2000 ETF (IWM) and Materials Select Sector SPDR Fund (XLB) show a strong relationship: their 3-year correlation of weekly returns is 0.74. The two funds also share 0% of their portfolios by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are IWM and XLB?
Across a 3-year window, the weekly returns of IWM and XLB correlate at 0.74, strong. The link has loosened recently: the 1-year correlation (0.60) runs below the 3-year figure (0.74). Stretching to 5 years gives 0.79, with an annualized covariance of 246.9 %².
Within IWM's tracked universe of 320 assets, XLB comes in at #27 by 3-year correlation. The trailing year gives IWM the advantage: +28.4% versus +17.6%, a 10.8-point spread. Stability stands out here, with the rolling one-year correlation confined to 0.64 through 0.88.
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 XLB: side by side
| IWM (iShares Russell 2000 ETF) | XLB (Materials Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +28.4% | +17.6% |
| 5-year return | +41.5% | +36.9% |
| Volatility (ann.) | 19.8% | 16.7% |
| Beta vs S&P 500 | 1.06 | 0.72 |
| Max drawdown (3Y) | -27.5% | -23.2% |
| Dividend yield | 0.91% | 1.68% |
| Expense ratio | 0.19% | 0.08% |
| Assets under management | $80.1B | $8.3B |
| Sector / category | ETF · US Small & Mid Cap | Sector ETF |
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. XLB is a Natural Resources fund from State Street Investment Management: $8.3B under management, 26 holdings, a 0.08% expense ratio, a 1.68% trailing dividend yield.
Portfolio overlap between IWM and XLB
The two portfolios are largely distinct: 0% of the funds' weight sits in the same underlying holdings (0 common positions). Correlation tells you they move together; overlap tells you why.
Largest positions held only by IWM: MOGA (0.35%), UMBF (0.34%), CYTK (0.33%), GKOS (0.33%), EAT (0.33%). Only by XLB: LIN (12.94%), NEM (8.02%), FCX (6.48%), SHW (4.87%), ECL (4.80%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-08-26.
Year-by-year returns
| Year | IWM | XLB |
|---|---|---|
| 2022 | -20.5% | -12.3% |
| 2023 | +16.8% | +12.5% |
| 2024 | +11.4% | +0.1% |
| 2025 | +12.7% | +9.9% |
| 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 XLB good diversifiers for each other?
Somewhat, no more. With 0.74 correlation, most large moves hit both names, and the diversification benefit stays modest.
FAQ
What is the correlation between IWM and XLB?
Using weekly returns as of 2026-08-27: 0.74 over 3 years, with 0.60 over the last year and 0.79 over 5 years.
Is XLB a good diversifier for IWM?
Somewhat, no more. With 0.74 correlation, most large moves hit both names, and the diversification benefit stays modest.
How much do IWM and XLB overlap?
The two funds share 0 holdings amounting to 0% of weight, per issuer portfolio files dated 2026-08-26.
Use this data
$ curl https://www.pairbook.io/api/v1/pairs/iwm-vs-xlb.json
Embed this badge (it refreshes with the data), with attribution:
[](https://www.pairbook.io/pair/iwm-vs-xlb/)
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Related comparisons
Hubs: IWM correlations · XLB correlations
