QUAL vs XLI: Correlation & Overlap
iShares MSCI USA Quality Factor ETF (QUAL) and Industrial Select Sector SPDR Fund (XLI) show a very strong relationship: their 3-year correlation of weekly returns is 0.83. Looking through to holdings, 8.9% of the two portfolios is the same by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are QUAL and XLI?
On 3 years of weekly data the QUAL/XLI correlation comes out at 0.83, very strong, meaning they move nearly in lockstep. The link has loosened recently: the 1-year correlation (0.68) runs below the 3-year figure (0.83). The 5-year figure is 0.85, and annualized covariance runs at 181.7 %².
Among the 106 assets we track against QUAL, XLI ranks #22 by 3-year correlation. Twelve-month performance is nearly a tie, at +19.7% for QUAL and +18.3% for XLI. Across three years, the rolling one-year figure varied moderately, from 0.67 to 0.93.
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.
QUAL vs XLI: side by side
| QUAL (iShares MSCI USA Quality Factor ETF) | XLI (Industrial Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +19.7% | +18.3% |
| 5-year return | +68.0% | +84.0% |
| Volatility (ann.) | 14.0% | 15.7% |
| Beta vs S&P 500 | 0.93 | 0.89 |
| Max drawdown (3Y) | -18.0% | -18.5% |
| Dividend yield | 0.86% | 1.15% |
| Expense ratio | 0.15% | 0.08% |
| Assets under management | $46.5B | $32.9B |
| Sector / category | ETF · US Style | Sector ETF |
QUAL, iShares's Large Blend fund, carries $46.5B under management, 123 holdings, a 0.15% expense ratio, a 0.86% trailing dividend yield. XLI is an Industrials fund from State Street Investment Management: $32.9B under management, 83 holdings, a 0.08% expense ratio, a 1.15% trailing dividend yield.
Portfolio overlap between QUAL and XLI
The two portfolios are largely distinct: 8.9% of the funds' weight sits in the same underlying holdings (16 common positions). Correlation tells you they move together; overlap tells you why.
| Common holding | Weight in QUAL | Weight in XLI |
|---|---|---|
| ADP | 1.22% | 1.98% |
| MMM | 0.93% | 1.66% |
| LMT | 0.91% | 2.02% |
| TT | 0.79% | 1.81% |
| HWM | 0.77% | 1.90% |
| ITW | 0.76% | 1.32% |
| CTAS | 0.63% | 1.23% |
| FIX | 0.56% | 1.00% |
| FAST | 0.53% | 1.04% |
| GWW | 0.52% | 1.02% |
| PAYX | 0.31% | 0.71% |
| ODFL | 0.28% | 0.64% |
| EME | 0.28% | 0.60% |
| EXPD | 0.22% | 0.44% |
| LII | 0.14% | 0.22% |
Largest positions held only by QUAL: MSFT (7.51%), AAPL (6.62%), NVDA (6.00%), META (3.75%), LLY (3.72%). Only by XLI: CAT (6.68%), GE (6.52%), RTX (5.04%), GEV (4.52%), UNP (3.25%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-08-26. Top 15 common positions shown.
Year-by-year returns
| Year | QUAL | XLI |
|---|---|---|
| 2022 | -20.5% | -5.6% |
| 2023 | +30.9% | +18.1% |
| 2024 | +22.3% | +17.3% |
| 2025 | +12.7% | +19.3% |
| 2026 | +13.5% | +15.9% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are QUAL and XLI good diversifiers for each other?
No. With a correlation of 0.83, QUAL and XLI move nearly in lockstep, so holding both adds very little diversification.
FAQ
What is the correlation between QUAL and XLI?
As of 2026-08-27, the correlation of weekly returns between QUAL and XLI is 0.83 over 3 years, 0.68 over 1 year and 0.85 over 5 years.
Is XLI a good diversifier for QUAL?
No. With a correlation of 0.83, QUAL and XLI move nearly in lockstep, so holding both adds very little diversification.
How much do QUAL and XLI overlap?
8.9% by weight, across 16 common holdings, based on issuer-disclosed portfolios as of 2026-08-26.
Use this data
$ curl https://www.pairbook.io/api/v1/pairs/qual-vs-xli.json
Drop this badge in a README or notebook; it updates with the data:
[](https://www.pairbook.io/pair/qual-vs-xli/)
No key needed, free to use. Full endpoint list in the API documentation.
Related comparisons
Hubs: QUAL correlations · XLI correlations
