SCHD vs XLY: Correlation & Overlap
How closely do Schwab US Dividend Equity ETF (SCHD) and Consumer Discretionary Select Sector SPDR Fund (XLY) trade together? Their weekly returns over three years give a correlation of 0.49, which is moderate. The two funds also share 6.3% of their portfolios by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are SCHD and XLY?
Across a 3-year window, the weekly returns of SCHD and XLY correlate at 0.49, moderate. Lately the two have drifted apart, with the 1-year correlation at 0.18 versus 0.49 over 3 years. Stretching to 5 years gives 0.61, with an annualized covariance of 122.9 %².
Among the 108 assets we track against SCHD, XLY ranks #60 by 3-year correlation. The last year tells two different stories: SCHD led by 29.7 percentage points, +29.6% for SCHD against -0.1% for XLY. This link changes with the market regime, having swung between 0.20 and 0.72 on a rolling one-year basis. Risk is not evenly split, since XLY carries 1.5 times the volatility of the other side.
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 XLY: side by side
| SCHD (Schwab US Dividend Equity ETF) | XLY (Consumer Discretionary Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +29.6% | -0.1% |
| 5-year return | +60.9% | +31.8% |
| Volatility (ann.) | 12.9% | 19.7% |
| Beta vs S&P 500 | 0.52 | 1.15 |
| Max drawdown (3Y) | -16.1% | -26.0% |
| Dividend yield | 3.13% | 0.78% |
| Expense ratio | 0.06% | 0.08% |
| Assets under management | $104.2B | $22.5B |
| 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. 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 SCHD and XLY
The two portfolios are largely distinct, with 4 holdings in common adding up to 6.3% of fund weight. Where correlation shows the co-movement, the overlap shows its source.
Largest positions held only by SCHD: MRK (4.92%), ABT (4.83%), AMGN (4.80%), KO (4.22%), VZ (3.97%). Only by XLY: AMZN (24.32%), TSLA (16.18%), MCD (4.11%), BKNG (4.04%), TJX (3.55%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-08-26. Top 4 common positions shown.
Year-by-year returns
| Year | SCHD | XLY |
|---|---|---|
| 2022 | -3.3% | -36.3% |
| 2023 | +4.5% | +39.6% |
| 2024 | +11.7% | +26.5% |
| 2025 | +4.3% | +7.4% |
| 2026 | +29.1% | -2.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are SCHD and XLY good diversifiers for each other?
Yes, to a useful degree: a correlation of 0.49 leaves real independence between the two, which historically damped combined volatility.
FAQ
What is the correlation between SCHD and XLY?
The SCHD/XLY correlation stands at 0.49 on a 3-year window (1 year: 0.18, 5 years: 0.61), computed from weekly returns as of 2026-08-27.
Is XLY a good diversifier for SCHD?
Yes, to a useful degree: a correlation of 0.49 leaves real independence between the two, which historically damped combined volatility.
How much do SCHD and XLY overlap?
Per the issuers' own portfolio disclosures (2026-08-26), the overlap is 6.3% by weight over 4 common positions.
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