QUAL vs XLK: Correlation & Overlap
How closely do iShares MSCI USA Quality Factor ETF (QUAL) and Technology Select Sector SPDR Fund (XLK) trade together? Their weekly returns over three years give a correlation of 0.85, which is very strong. The two funds also share 33.5% of their portfolios by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are QUAL and XLK?
Over the past 3 years, QUAL and XLK moved with a correlation of 0.85, which is very strong, meaning they move nearly in lockstep. The past 12 months show a weaker link (0.73) than the 3-year average (0.85). Over 5 years the correlation is 0.89, and the annualized covariance of weekly returns is 285.8 %².
Within QUAL's tracked universe of 106 assets, XLK comes in at #19 by 3-year correlation. Correlation aside, the last 12 months split them widely, with XLK ahead by 23.7 points (+19.7% versus +43.4%). Stability stands out here, with the rolling one-year correlation confined to 0.71 through 0.93. One caveat on sizing: XLK is 1.7 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.
QUAL vs XLK: side by side
| QUAL (iShares MSCI USA Quality Factor ETF) | XLK (Technology Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +19.7% | +43.4% |
| 5-year return | +68.0% | +145.2% |
| Volatility (ann.) | 14.0% | 24.0% |
| Beta vs S&P 500 | 0.93 | 1.50 |
| Max drawdown (3Y) | -18.0% | -25.7% |
| Dividend yield | 0.86% | 0.45% |
| Expense ratio | 0.15% | 0.08% |
| Assets under management | $46.5B | $115.4B |
| Sector / category | ETF · US Style | Sector ETF |
QUAL is a Large Blend fund from iShares: $46.5B under management, 123 holdings, a 0.15% expense ratio, a 0.86% trailing dividend yield. 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.
Portfolio overlap between QUAL and XLK
The two portfolios partially overlap: 33.5% of the funds' weight sits in the same underlying holdings (19 common positions). Correlation tells you they move together; overlap tells you why.
| Common holding | Weight in QUAL | Weight in XLK |
|---|---|---|
| MSFT | 7.51% | 10.10% |
| AAPL | 6.62% | 12.61% |
| NVDA | 6.00% | 13.91% |
| LRCX | 3.66% | 2.62% |
| AMAT | 2.88% | 2.55% |
| KLAC | 2.44% | 1.61% |
| ANET | 1.52% | 1.40% |
| ADBE | 1.05% | 0.74% |
| ACN | 0.73% | 0.75% |
| FTNT | 1.10% | 0.66% |
| INTU | 0.57% | 0.64% |
| CDNS | 0.55% | 0.62% |
| MSI | 0.45% | 0.54% |
| ADSK | 0.38% | 0.36% |
| TER | 0.34% | 0.38% |
Largest positions held only by QUAL: META (3.75%), LLY (3.72%), TJX (3.40%), V (3.26%), MA (2.34%). Only by XLK: AVGO (4.61%), AMD (4.09%), MU (3.99%), CSCO (2.97%), INTC (2.92%).
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 | XLK |
|---|---|---|
| 2022 | -20.5% | -27.7% |
| 2023 | +30.9% | +56.0% |
| 2024 | +22.3% | +21.6% |
| 2025 | +12.7% | +24.6% |
| 2026 | +13.5% | +31.3% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are QUAL and XLK good diversifiers for each other?
No: a correlation of 0.85 means QUAL and XLK tend to fall together, which is precisely when diversification is supposed to help.
FAQ
What is the correlation between QUAL and XLK?
As of 2026-08-27, the correlation of weekly returns between QUAL and XLK is 0.85 over 3 years, 0.73 over 1 year and 0.89 over 5 years.
Is XLK a good diversifier for QUAL?
No: a correlation of 0.85 means QUAL and XLK tend to fall together, which is precisely when diversification is supposed to help.
How much do QUAL and XLK overlap?
33.5% by weight, across 19 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-xlk.json
Markdown for the live badge, attribution link included:
[](https://www.pairbook.io/pair/qual-vs-xlk/)
The core API is free. Terms and every endpoint in the API documentation.
Related comparisons
Hubs: QUAL correlations · XLK correlations
