MSFT vs XLK: Correlation
Microsoft (MSFT) and Technology Select Sector SPDR Fund (XLK) show a strong relationship: their 3-year correlation of weekly returns is 0.62.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are MSFT and XLK?
Over the past 3 years, MSFT and XLK moved with a correlation of 0.62, which is strong. The link has loosened recently: the 1-year correlation (0.46) runs below the 3-year figure (0.62). Over 5 years the correlation is 0.73, and the annualized covariance of weekly returns is 407.2 %².
Among the 39 assets we track against MSFT, XLK ranks #10 by 3-year correlation. Their recent paths diverged sharply: over the last 12 months XLK outperformed by 42.9 percentage points (+0.5% for MSFT against +43.4% for XLK). On a rolling one-year basis the correlation drifted between 0.46 and 0.84, a moderate band.
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.
MSFT vs XLK: side by side
| MSFT (Microsoft) | XLK (Technology Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +0.5% | +43.4% |
| 5-year return | +73.3% | +145.2% |
| Volatility (ann.) | 27.5% | 24.0% |
| Beta vs S&P 500 | 1.12 | 1.50 |
| Max drawdown (3Y) | -34.5% | -25.7% |
| Market cap | $3,750.3B | – |
| P/E (trailing) | 28.1 | – |
| Dividend yield | 0.73% | 0.45% |
| Expense ratio | – | 0.08% |
| Assets under management | – | $115.4B |
| Sector / category | Information Technology | Sector ETF |
On the fund side, XLK sits in the Technology category at State Street Investment Management, with $115.4B under management, 73 holdings, a 0.08% expense ratio, a 0.45% trailing dividend yield.
Year-by-year returns
| Year | MSFT | XLK |
|---|---|---|
| 2022 | -28.0% | -27.7% |
| 2023 | +58.2% | +56.0% |
| 2024 | +12.9% | +21.6% |
| 2025 | +15.6% | +24.6% |
| 2026 | +5.1% | +31.3% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Fund exposure
Keep in mind that XLK holds MSFT at a 10.1% weight, which makes a slice of this correlation mechanical rather than coincidental.
Are MSFT and XLK good diversifiers for each other?
To a limited degree. At 0.62 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 MSFT and XLK?
Using weekly returns as of 2026-08-27: 0.62 over 3 years, with 0.46 over the last year and 0.73 over 5 years.
Is XLK a good diversifier for MSFT?
To a limited degree. At 0.62 the two still catch most of the same waves, so the pair smooths returns a little without insulating either from a shared selloff.
What does a correlation of 0.62 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/msft-vs-xlk.json
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[](https://www.pairbook.io/pair/msft-vs-xlk/)
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Related comparisons
Hubs: MSFT correlations · XLK correlations
