IWM vs XLY: Correlation & Overlap
Measured on weekly returns over the past three years, iShares Russell 2000 ETF (IWM) and Consumer Discretionary Select Sector SPDR Fund (XLY) carry a correlation of 0.72, a strong 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 XLY?
Over the past 3 years, IWM and XLY moved with a correlation of 0.72, which is strong. Recent behaviour matches the longer record: 0.72 over 1 year against 0.72 over 3. Over 5 years the correlation is 0.78, and the annualized covariance of weekly returns is 280.8 %².
Among the 320 assets we track against IWM, XLY ranks #37 by 3-year correlation. Their recent paths diverged sharply: over the last 12 months IWM outperformed by 28.5 percentage points (+28.4% for IWM against -0.1% for XLY). Across three years, the rolling one-year figure varied moderately, from 0.58 to 0.85.
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 XLY: side by side
| IWM (iShares Russell 2000 ETF) | XLY (Consumer Discretionary Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +28.4% | -0.1% |
| 5-year return | +41.5% | +31.8% |
| Volatility (ann.) | 19.8% | 19.7% |
| Beta vs S&P 500 | 1.06 | 1.15 |
| Max drawdown (3Y) | -27.5% | -26.0% |
| Dividend yield | 0.91% | 0.78% |
| Expense ratio | 0.19% | 0.08% |
| Assets under management | $80.1B | $22.5B |
| 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. XLY is a Consumer Cyclical fund from State Street Investment Management: $22.5B under management, 47 holdings, a 0.08% expense ratio, a 0.78% trailing dividend yield.
Portfolio overlap between IWM and XLY
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 XLY: AMZN (24.32%), TSLA (16.18%), HD (5.54%), MCD (4.11%), BKNG (4.04%).
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 | XLY |
|---|---|---|
| 2022 | -20.5% | -36.3% |
| 2023 | +16.8% | +39.6% |
| 2024 | +11.4% | +26.5% |
| 2025 | +12.7% | +7.4% |
| 2026 | +22.3% | -2.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are IWM and XLY good diversifiers for each other?
To a limited degree. At 0.72 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 XLY?
As of 2026-08-27, the correlation of weekly returns between IWM and XLY is 0.72 over 3 years, 0.72 over 1 year and 0.78 over 5 years.
Is XLY a good diversifier for IWM?
To a limited degree. At 0.72 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 XLY 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-xly.json
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Related comparisons
Hubs: IWM correlations · XLY correlations
