SHY vs XLE: Correlation
How closely do iShares 1-3 Year Treasury Bond ETF (SHY) and Energy Select Sector SPDR Fund (XLE) trade together? Their weekly returns over three years give a correlation of -0.24, which is negative.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are SHY and XLE?
On 3 years of weekly data the SHY/XLE correlation comes out at -0.24, negative, meaning they tend to move in opposite directions. The link has loosened recently: the 1-year correlation (-0.39) runs below the 3-year figure (-0.24). The 5-year figure is -0.11, and annualized covariance runs at -8.5 %².
Among the 62 assets we track against SHY, XLE ranks #39 by 3-year correlation. Their recent paths diverged sharply: over the last 12 months XLE outperformed by 41.5 percentage points (+2.5% for SHY against +44.0% for XLE). Do not treat this figure as fixed: across three years the rolling one-year correlation ranged all the way from -0.49 to 0.07. Note the risk asymmetry: XLE runs 14.4 times the annualized volatility of the other leg, so equal-weighting the two is not an equal-risk position.
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.
SHY vs XLE: side by side
| SHY (iShares 1-3 Year Treasury Bond ETF) | XLE (Energy Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +2.5% | +44.0% |
| 5-year return | +9.6% | +206.7% |
| Volatility (ann.) | 1.6% | 23.1% |
| Beta vs S&P 500 | 0.00 | 0.27 |
| Max drawdown (3Y) | -1.0% | -20.1% |
| Dividend yield | 3.65% | 2.55% |
| Expense ratio | 0.15% | 0.08% |
| Assets under management | $25.1B | $39.2B |
| Sector / category | ETF · Bonds | Sector ETF |
SHY, iShares's Short Government fund, carries $25.1B under management, a 0.15% expense ratio, a 3.65% trailing dividend yield. XLE is an Equity Energy fund from State Street Investment Management: $39.2B under management, 22 holdings, a 0.08% expense ratio, a 2.55% trailing dividend yield.
Year-by-year returns
| Year | SHY | XLE |
|---|---|---|
| 2022 | -3.9% | +64.3% |
| 2023 | +4.2% | -0.6% |
| 2024 | +3.9% | +5.6% |
| 2025 | +5.0% | +7.9% |
| 2026 | +1.1% | +41.2% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are SHY and XLE good diversifiers for each other?
Yes. With a correlation of -0.24, SHY and XLE have moved largely independently, which makes them a genuinely diversifying pair by historical standards.
FAQ
What is the correlation between SHY and XLE?
As of 2026-08-27, the correlation of weekly returns between SHY and XLE is -0.24 over 3 years, -0.39 over 1 year and -0.11 over 5 years.
Is XLE a good diversifier for SHY?
Yes. With a correlation of -0.24, SHY and XLE have moved largely independently, which makes them a genuinely diversifying pair by historical standards.
What does a correlation of -0.24 mean?
On the −1 to +1 scale, -0.24 describes how much the two returns move together: +1 is lockstep, 0 is independence, negative values mean opposite directions. It says nothing about which performed better.
Use this data
$ curl https://www.pairbook.io/api/v1/pairs/shy-vs-xle.json
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Related comparisons
Hubs: SHY correlations · XLE correlations
