QQQ vs XLY: Correlation & Overlap
Measured on weekly returns over the past three years, Invesco QQQ Trust (QQQ) and Consumer Discretionary Select Sector SPDR Fund (XLY) carry a correlation of 0.82, a very strong link. By holdings, the two funds overlap 10.4% by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are QQQ and XLY?
Over the past 3 years, QQQ and XLY moved with a correlation of 0.82, which is very strong, meaning they move nearly in lockstep. The relationship has been stable: the 1-year correlation (0.75) sits close to the 3-year figure. Over 5 years the correlation is 0.87, and the annualized covariance of weekly returns is 314.3 %².
Within QQQ's tracked universe of 4755 assets, XLY comes in at #30 by 3-year correlation. Correlation aside, the last 12 months split them widely, with QQQ ahead by 26.4 points (+26.3% versus -0.1%). The rolling one-year correlation stayed in a tight band between 0.75 and 0.90 over the past three years, which points to a structural rather than episodic relationship.
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.
QQQ vs XLY: side by side
| QQQ (Invesco QQQ Trust) | XLY (Consumer Discretionary Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +26.3% | -0.1% |
| 5-year return | +95.4% | +31.8% |
| Volatility (ann.) | 19.6% | 19.7% |
| Beta vs S&P 500 | 1.28 | 1.15 |
| Max drawdown (3Y) | -22.8% | -26.0% |
| Dividend yield | 0.44% | 0.78% |
| Expense ratio | 0.18% | 0.08% |
| Assets under management | $452.8B | $22.5B |
| Sector / category | ETF · US Growth & Tech | Sector ETF |
On the fund side, QQQ sits in the Large Growth category at Invesco, with $452.8B under management, 104 holdings, a 0.18% expense ratio, a 0.44% 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 QQQ and XLY
The two portfolios are largely distinct, with 9 holdings in common adding up to 10.4% of fund weight. Where correlation shows the co-movement, the overlap shows its source.
| Common holding | Weight in QQQ | Weight in XLY |
|---|---|---|
| AMZN | 4.50% | 24.32% |
| TSLA | 2.77% | 16.18% |
| BKNG | 0.72% | 4.04% |
| SBUX | 0.55% | 3.08% |
| DASH | 0.43% | 2.24% |
| MAR | 0.42% | 1.96% |
| ABNB | 0.35% | 1.96% |
| ROST | 0.34% | 1.90% |
| ORLY | 0.33% | 1.85% |
Largest positions held only by QQQ: NVDA (8.15%), AAPL (7.39%), MSFT (5.93%), MU (4.69%), AMD (3.48%). Only by XLY: HD (5.54%), MCD (4.11%), TJX (3.55%), LOW (2.94%), GM (1.94%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-08-26. Top 9 common positions shown.
Year-by-year returns
| Year | QQQ | XLY |
|---|---|---|
| 2022 | -32.6% | -36.3% |
| 2023 | +54.9% | +39.6% |
| 2024 | +25.6% | +26.5% |
| 2025 | +20.8% | +7.4% |
| 2026 | +17.7% | -2.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are QQQ and XLY good diversifiers for each other?
No: a correlation of 0.82 means QQQ and XLY tend to fall together, which is precisely when diversification is supposed to help.
FAQ
What is the correlation between QQQ and XLY?
The QQQ/XLY correlation stands at 0.82 on a 3-year window (1 year: 0.75, 5 years: 0.87), computed from weekly returns as of 2026-08-27.
Is XLY a good diversifier for QQQ?
No: a correlation of 0.82 means QQQ and XLY tend to fall together, which is precisely when diversification is supposed to help.
How much do QQQ and XLY overlap?
10.4% by weight, across 9 common holdings, based on issuer-disclosed portfolios as of 2026-08-26.
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Hubs: QQQ correlations · XLY correlations
