QUAL vs XLU: Correlation & Overlap
Measured on weekly returns over the past three years, iShares MSCI USA Quality Factor ETF (QUAL) and Utilities Select Sector SPDR Fund (XLU) carry a correlation of 0.22, a weak link. By holdings, the two funds overlap 2.0% by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are QUAL and XLU?
Across a 3-year window, the weekly returns of QUAL and XLU correlate at 0.22, weak. Lately the two have drifted apart, with the 1-year correlation at -0.04 versus 0.22 over 3 years. Stretching to 5 years gives 0.41, with an annualized covariance of 48.4 %².
By 3-year correlation, XLU places #95 of the 106 assets tracked against QUAL. Correlation aside, the last 12 months split them widely, with QUAL ahead by 15.6 points (+19.7% versus +4.1%). Do not treat this figure as fixed: across three years the rolling one-year correlation ranged all the way from -0.07 to 0.56.
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 XLU: side by side
| QUAL (iShares MSCI USA Quality Factor ETF) | XLU (Utilities Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +19.7% | +4.1% |
| 5-year return | +68.0% | +46.3% |
| Volatility (ann.) | 14.0% | 15.8% |
| Beta vs S&P 500 | 0.93 | 0.26 |
| Max drawdown (3Y) | -18.0% | -13.1% |
| Dividend yield | 0.86% | 2.70% |
| Expense ratio | 0.15% | 0.08% |
| Assets under management | $46.5B | $23.1B |
| Sector / category | ETF · US Style | Sector ETF |
On the fund side, QUAL sits in the Large Blend category at iShares, with $46.5B under management, 123 holdings, a 0.15% expense ratio, a 0.86% trailing dividend yield. XLU is an Utilities fund from State Street Investment Management: $23.1B under management, 31 holdings, a 0.08% expense ratio, a 2.70% trailing dividend yield.
Portfolio overlap between QUAL and XLU
The two portfolios are largely distinct. Weighing the shared positions, 2.0% of the two funds is identical, spread across 5 common holdings. That shared book is a large part of why the returns line up.
| Common holding | Weight in QUAL | Weight in XLU |
|---|---|---|
| XEL | 0.51% | 3.57% |
| ED | 0.47% | 2.93% |
| ATO | 0.42% | 2.08% |
| AEE | 0.33% | 2.20% |
| AWK | 0.29% | 1.98% |
Largest positions held only by QUAL: MSFT (7.51%), AAPL (6.62%), NVDA (6.00%), META (3.75%), LLY (3.72%). Only by XLU: NEE (12.94%), SO (7.45%), DUK (7.00%), CEG (6.58%), AEP (4.94%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-08-26. Top 5 common positions shown.
Year-by-year returns
| Year | QUAL | XLU |
|---|---|---|
| 2022 | -20.5% | +1.4% |
| 2023 | +30.9% | -7.2% |
| 2024 | +22.3% | +23.3% |
| 2025 | +12.7% | +16.0% |
| 2026 | +13.5% | +2.5% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are QUAL and XLU good diversifiers for each other?
Reasonably. At 0.22, QUAL and XLU keep a meaningful degree of independence, and combining them has historically reduced portfolio volatility.
FAQ
What is the correlation between QUAL and XLU?
The QUAL/XLU correlation stands at 0.22 on a 3-year window (1 year: -0.04, 5 years: 0.41), computed from weekly returns as of 2026-08-27.
Is XLU a good diversifier for QUAL?
Reasonably. At 0.22, QUAL and XLU keep a meaningful degree of independence, and combining them has historically reduced portfolio volatility.
How much do QUAL and XLU overlap?
The two funds share 5 holdings amounting to 2.0% of weight, per issuer portfolio files dated 2026-08-26.
Use this data
$ curl https://www.pairbook.io/api/v1/pairs/qual-vs-xlu.json
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Related comparisons
Hubs: QUAL correlations · XLU correlations
