SCHD vs XLF: Correlation & Overlap
Schwab US Dividend Equity ETF (SCHD) and Financial Select Sector SPDR Fund (XLF) show a strong relationship: their 3-year correlation of weekly returns is 0.69. The two funds also share 3.5% of their portfolios by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are SCHD and XLF?
On 3 years of weekly data the SCHD/XLF correlation comes out at 0.69, strong. The link has loosened recently: the 1-year correlation (0.35) runs below the 3-year figure (0.69). The 5-year figure is 0.80, and annualized covariance runs at 143.4 %².
Among the 108 assets we track against SCHD, XLF ranks #20 by 3-year correlation. Correlation aside, the last 12 months split them widely, with SCHD ahead by 20.3 points (+29.6% versus +9.3%). The relationship is regime-dependent: the rolling one-year correlation swung between 0.39 and 0.92 over the past three years, so this pair behaves very differently depending on the market environment.
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.
SCHD vs XLF: side by side
| SCHD (Schwab US Dividend Equity ETF) | XLF (Financial Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +29.6% | +9.3% |
| 5-year return | +60.9% | +64.2% |
| Volatility (ann.) | 12.9% | 16.2% |
| Beta vs S&P 500 | 0.52 | 0.84 |
| Max drawdown (3Y) | -16.1% | -15.5% |
| Dividend yield | 3.13% | 1.42% |
| Expense ratio | 0.06% | 0.08% |
| Assets under management | $104.2B | $57.9B |
| Sector / category | ETF · Dividend | Sector ETF |
SCHD is a Large Value fund from Schwab ETFs: $104.2B under management, 101 holdings, a 0.06% expense ratio, a 3.13% trailing dividend yield. XLF is a Financial fund from State Street Investment Management: $57.9B under management, 77 holdings, a 0.08% expense ratio, a 1.42% trailing dividend yield.
Portfolio overlap between SCHD and XLF
The two portfolios are largely distinct, with 8 holdings in common adding up to 3.5% of fund weight. Where correlation shows the co-movement, the overlap shows its source.
| Common holding | Weight in SCHD | Weight in XLF |
|---|---|---|
| BX | 2.58% | 1.29% |
| FITB | 1.21% | 0.61% |
| ARES | 0.73% | 0.36% |
| CINF | 0.65% | 0.32% |
| RF | 0.64% | 0.32% |
| TROW | 0.59% | 0.29% |
| PFG | 0.54% | 0.27% |
| ERIE | 0.16% | 0.08% |
Largest positions held only by SCHD: MRK (4.92%), ABT (4.83%), AMGN (4.80%), KO (4.22%), VZ (3.97%). Only by XLF: JPM (11.61%), BRK.B (11.25%), V (7.74%), MA (5.87%), BAC (4.94%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-08-26. Top 8 common positions shown.
Year-by-year returns
| Year | SCHD | XLF |
|---|---|---|
| 2022 | -3.3% | -10.6% |
| 2023 | +4.5% | +12.0% |
| 2024 | +11.7% | +30.6% |
| 2025 | +4.3% | +14.9% |
| 2026 | +29.1% | +6.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are SCHD and XLF good diversifiers for each other?
Only partially. A correlation of 0.69 means SCHD and XLF share most of their swings. Pairing them dampens volatility somewhat, but it will not protect against a common drawdown.
FAQ
What is the correlation between SCHD and XLF?
Using weekly returns as of 2026-08-27: 0.69 over 3 years, with 0.35 over the last year and 0.80 over 5 years.
Is XLF a good diversifier for SCHD?
Only partially. A correlation of 0.69 means SCHD and XLF share most of their swings. Pairing them dampens volatility somewhat, but it will not protect against a common drawdown.
How much do SCHD and XLF overlap?
3.5% by weight, across 8 common holdings, based on issuer-disclosed portfolios as of 2026-08-26.
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