IWM vs XLC: Correlation & Overlap
Measured on weekly returns over the past three years, iShares Russell 2000 ETF (IWM) and Communication Services Select Sector SPDR Fund (XLC) carry a correlation of 0.56, a moderate link. By holdings, the two funds overlap 0% by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are IWM and XLC?
Over the past 3 years, IWM and XLC moved with a correlation of 0.56, which is moderate. Lately the two have drifted apart, with the 1-year correlation at 0.44 versus 0.56 over 3 years. Over 5 years the correlation is 0.65, and the annualized covariance of weekly returns is 176.8 %².
Within IWM's tracked universe of 320 assets, XLC comes in at #167 by 3-year correlation. Their recent paths diverged sharply: over the last 12 months IWM outperformed by 26.9 percentage points (+28.4% for IWM against +1.5% for XLC). This link changes with the market regime, having swung between 0.23 and 0.82 on a rolling one-year basis.
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 XLC: side by side
| IWM (iShares Russell 2000 ETF) | XLC (Communication Services Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +28.4% | +1.5% |
| 5-year return | +41.5% | +37.5% |
| Volatility (ann.) | 19.8% | 16.0% |
| Beta vs S&P 500 | 1.06 | 0.90 |
| Max drawdown (3Y) | -27.5% | -18.0% |
| Dividend yield | 0.91% | 1.32% |
| Expense ratio | 0.19% | 0.08% |
| Assets under management | $80.1B | $21.7B |
| 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. On the fund side, XLC sits in the Communications category at State Street Investment Management, with $21.7B under management, 24 holdings, a 0.08% expense ratio, a 1.32% trailing dividend yield.
Portfolio overlap between IWM and XLC
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 XLC: META (16.73%), GOOGL (10.29%), GOOG (8.22%), T (5.20%), VZ (4.99%).
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 | XLC |
|---|---|---|
| 2022 | -20.5% | -37.6% |
| 2023 | +16.8% | +52.8% |
| 2024 | +11.4% | +34.7% |
| 2025 | +12.7% | +23.1% |
| 2026 | +22.3% | -4.8% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are IWM and XLC good diversifiers for each other?
To a limited degree. At 0.56 the two still catch most of the same waves, so the pair smooths returns a little without insulating either from a shared selloff.
FAQ
What is the correlation between IWM and XLC?
The IWM/XLC correlation stands at 0.56 on a 3-year window (1 year: 0.44, 5 years: 0.65), computed from weekly returns as of 2026-08-27.
Is XLC a good diversifier for IWM?
To a limited degree. At 0.56 the two still catch most of the same waves, so the pair smooths returns a little without insulating either from a shared selloff.
How much do IWM and XLC overlap?
Per the issuers' own portfolio disclosures (2026-08-26), the overlap is 0% by weight over 0 common positions.
Use this data
$ curl https://www.pairbook.io/api/v1/pairs/iwm-vs-xlc.json
Markdown for the live badge, attribution link included:
[](https://www.pairbook.io/pair/iwm-vs-xlc/)
The core API is free. Terms and every endpoint in the API documentation.
Related comparisons
Hubs: IWM correlations · XLC correlations
