IWM vs XLE: Correlation & Overlap
How closely do iShares Russell 2000 ETF (IWM) and Energy Select Sector SPDR Fund (XLE) trade together? Their weekly returns over three years give a correlation of 0.28, which is weak. Looking through to holdings, 0% 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 XLE?
On 3 years of weekly data the IWM/XLE correlation comes out at 0.28, weak. Lately the two have drifted apart, with the 1-year correlation at -0.32 versus 0.28 over 3 years. The 5-year figure is 0.33, and annualized covariance runs at 128.5 %².
Among the 320 assets we track against IWM, XLE ranks #310 by 3-year correlation. Correlation aside, the last 12 months split them widely, with XLE ahead by 15.6 points (+28.4% versus +44.0%). The relationship is regime-dependent: the rolling one-year correlation swung between -0.32 and 0.64 over the past three years, so this pair behaves very differently depending on the market environment.
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 XLE: side by side
| IWM (iShares Russell 2000 ETF) | XLE (Energy Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +28.4% | +44.0% |
| 5-year return | +41.5% | +206.7% |
| Volatility (ann.) | 19.8% | 23.1% |
| Beta vs S&P 500 | 1.06 | 0.27 |
| Max drawdown (3Y) | -27.5% | -20.1% |
| Dividend yield | 0.91% | 2.55% |
| Expense ratio | 0.19% | 0.08% |
| Assets under management | $80.1B | $39.2B |
| Sector / category | ETF · US Small & Mid Cap | Sector ETF |
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. XLE is an Equity Energy fund from State Street Investment Management: $39.2B under management, 22 holdings, a 0.08% expense ratio, a 2.55% trailing dividend yield.
Portfolio overlap between IWM and XLE
The two portfolios are largely distinct. Weighing the shared positions, 0% of the two funds is identical, spread across 0 common holdings. That shared book is a large part of why the returns line up.
Largest positions held only by IWM: MOGA (0.35%), UMBF (0.34%), CYTK (0.33%), GKOS (0.33%), EAT (0.33%). Only by XLE: XOM (20.03%), CVX (14.84%), COP (6.30%), MPC (5.40%), PSX (5.37%).
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 | XLE |
|---|---|---|
| 2022 | -20.5% | +64.3% |
| 2023 | +16.8% | -0.6% |
| 2024 | +11.4% | +5.6% |
| 2025 | +12.7% | +7.9% |
| 2026 | +22.3% | +41.2% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are IWM and XLE good diversifiers for each other?
A fair diversifier. At 0.28, enough of each asset's movement is its own that the pair has smoothed outcomes historically.
FAQ
What is the correlation between IWM and XLE?
Using weekly returns as of 2026-08-27: 0.28 over 3 years, with -0.32 over the last year and 0.33 over 5 years.
Is XLE a good diversifier for IWM?
A fair diversifier. At 0.28, enough of each asset's movement is its own that the pair has smoothed outcomes historically.
How much do IWM and XLE overlap?
0% by weight, across 0 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-xle.json
Markdown for the live badge, attribution link included:
[](https://www.pairbook.io/pair/iwm-vs-xle/)
Free with attribution; caching and terms are described in the API documentation.
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Hubs: IWM correlations · XLE correlations
