MSCI vs XLF: Correlation
How closely do MSCI (MSCI) and Financial Select Sector SPDR Fund (XLF) trade together? Their weekly returns over three years give a correlation of 0.48, which is moderate.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are MSCI and XLF?
On 3 years of weekly data the MSCI/XLF correlation comes out at 0.48, moderate. The past 12 months show a weaker link (0.28) than the 3-year average (0.48). The 5-year figure is 0.55, and annualized covariance runs at 197.9 %².
Within MSCI's tracked universe of 27 assets, XLF comes in at #15 by 3-year correlation. Over the last 12 months XLF came out ahead by 8.0 percentage points (+1.3% against +9.3%). The rolling one-year correlation moved between 0.24 and 0.73 over the past three years, a moderate range. One caveat on sizing: MSCI is 1.6 times as volatile as the other leg, so an equal-dollar split is far from equal-risk.
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.
MSCI vs XLF: side by side
| MSCI (MSCI) | XLF (Financial Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +1.3% | +9.3% |
| 5-year return | -5.6% | +64.2% |
| Volatility (ann.) | 25.4% | 16.2% |
| Beta vs S&P 500 | 0.85 | 0.84 |
| Max drawdown (3Y) | -26.0% | -15.5% |
| Market cap | $41.4B | – |
| P/E (trailing) | 30.9 | – |
| Dividend yield | 1.36% | 1.42% |
| Expense ratio | – | 0.08% |
| Assets under management | – | $57.9B |
| Sector / category | Financials | Sector ETF |
XLF is a Financial fund from State Street Investment Management: $57.9B under management, 77 holdings, a 0.08% expense ratio, a 1.42% trailing dividend yield.
Year-by-year returns
| Year | MSCI | XLF |
|---|---|---|
| 2022 | -23.3% | -10.6% |
| 2023 | +22.9% | +12.0% |
| 2024 | +7.3% | +30.6% |
| 2025 | -3.2% | +14.9% |
| 2026 | +0.3% | +6.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Fund exposure
MSCI represents 0.5% of XLF's portfolio, so part of any move in XLF is MSCI itself, and the correlation between them is partly mechanical.
Are MSCI and XLF good diversifiers for each other?
A fair diversifier. At 0.48, enough of each asset's movement is its own that the pair has smoothed outcomes historically.
FAQ
What is the correlation between MSCI and XLF?
The MSCI/XLF correlation stands at 0.48 on a 3-year window (1 year: 0.28, 5 years: 0.55), computed from weekly returns as of 2026-08-27.
Is XLF a good diversifier for MSCI?
A fair diversifier. At 0.48, enough of each asset's movement is its own that the pair has smoothed outcomes historically.
What does a correlation of 0.48 mean?
Correlation ranges from −1 to +1. Values near +1 mean two assets move together, near 0 that they move independently, and negative values that they tend to move in opposite directions. It measures co-movement, not performance.
Use this data
$ curl https://www.pairbook.io/api/v1/pairs/msci-vs-xlf.json
Embed this badge (it refreshes with the data), with attribution:
[](https://www.pairbook.io/pair/msci-vs-xlf/)
Free with attribution; caching and terms are described in the API documentation.
Related comparisons
Hubs: MSCI correlations · XLF correlations
