IWM vs XLP: Correlation & Overlap
How closely do iShares Russell 2000 ETF (IWM) and Consumer Staples Select Sector SPDR Fund (XLP) trade together? Their weekly returns over three years give a correlation of 0.39, which is moderate. 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 XLP?
Across a 3-year window, the weekly returns of IWM and XLP correlate at 0.39, moderate. The relationship has been stable: the 1-year correlation (0.35) sits close to the 3-year figure. Stretching to 5 years gives 0.47, with an annualized covariance of 85.1 %².
Among the 320 assets we track against IWM, XLP ranks #302 by 3-year correlation. Their recent paths diverged sharply: over the last 12 months IWM outperformed by 20.1 percentage points (+28.4% for IWM against +8.3% for XLP). On a rolling one-year basis the correlation drifted between 0.23 and 0.54, a moderate band. Note the risk asymmetry: IWM runs 1.8 times the annualized volatility of the other leg, so equal-weighting the two is not an equal-risk position.
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 XLP: side by side
| IWM (iShares Russell 2000 ETF) | XLP (Consumer Staples Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +28.4% | +8.3% |
| 5-year return | +41.5% | +34.7% |
| Volatility (ann.) | 19.8% | 11.1% |
| Beta vs S&P 500 | 1.06 | 0.23 |
| Max drawdown (3Y) | -27.5% | -9.7% |
| Dividend yield | 0.91% | 2.58% |
| Expense ratio | 0.19% | 0.08% |
| Assets under management | $80.1B | $14.6B |
| 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. On the fund side, XLP sits in the Consumer Defensive category at State Street Investment Management, with $14.6B under management, 35 holdings, a 0.08% expense ratio, a 2.58% trailing dividend yield.
Portfolio overlap between IWM and XLP
The two portfolios are largely distinct, with 0 holdings in common adding up to 0% of fund weight. Where correlation shows the co-movement, the overlap shows its source.
Largest positions held only by IWM: MOGA (0.35%), UMBF (0.34%), CYTK (0.33%), GKOS (0.33%), EAT (0.33%). Only by XLP: WMT (9.62%), COST (8.92%), KO (7.34%), PG (7.10%), PM (6.36%).
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 | XLP |
|---|---|---|
| 2022 | -20.5% | -0.8% |
| 2023 | +16.8% | -0.8% |
| 2024 | +11.4% | +12.2% |
| 2025 | +12.7% | +1.5% |
| 2026 | +22.3% | +10.9% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are IWM and XLP good diversifiers for each other?
A fair diversifier. At 0.39, enough of each asset's movement is its own that the pair has smoothed outcomes historically.
FAQ
What is the correlation between IWM and XLP?
As of 2026-08-27, the correlation of weekly returns between IWM and XLP is 0.39 over 3 years, 0.35 over 1 year and 0.47 over 5 years.
Is XLP a good diversifier for IWM?
A fair diversifier. At 0.39, enough of each asset's movement is its own that the pair has smoothed outcomes historically.
How much do IWM and XLP overlap?
The two funds share 0 holdings amounting to 0% of weight, per issuer portfolio files dated 2026-08-26.
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Hubs: IWM correlations · XLP correlations
