SPY vs XLC: Correlation & Overlap
Measured on weekly returns over the past three years, SPDR S&P 500 ETF Trust (SPY) and Communication Services Select Sector SPDR Fund (XLC) carry a correlation of 0.82, a very strong link. Looking through to holdings, 9.6% of the two portfolios is the same by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are SPY and XLC?
Across a 3-year window, the weekly returns of SPY and XLC correlate at 0.82, very strong, meaning they move nearly in lockstep. Recent behaviour matches the longer record: 0.74 over 1 year against 0.82 over 3. Stretching to 5 years gives 0.83, with an annualized covariance of 188.1 %².
Within SPY's tracked universe of 4755 assets, XLC comes in at #47 by 3-year correlation. Their recent paths diverged sharply: over the last 12 months SPY outperformed by 19.1 percentage points (+20.6% for SPY against +1.5% for XLC). Across three years, the rolling one-year figure varied moderately, from 0.65 to 0.91.
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.
SPY vs XLC: side by side
| SPY (SPDR S&P 500 ETF Trust) | XLC (Communication Services Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +20.6% | +1.5% |
| 5-year return | +82.4% | +37.5% |
| Volatility (ann.) | 14.5% | 16.0% |
| Beta vs S&P 500 | 1.00 | 0.90 |
| Max drawdown (3Y) | -18.8% | -18.0% |
| Dividend yield | 1.01% | 1.32% |
| Expense ratio | 0.09% | 0.08% |
| Assets under management | $795.3B | $21.7B |
| Sector / category | ETF · US Large Cap | Sector ETF |
SPY, State Street Investment Management's Large Blend fund, carries $795.3B under management, 504 holdings, a 0.09% expense ratio, a 1.01% trailing dividend yield. On the fund side, XLC sits in the Communications category at State Street Investment Management, with $21.7B under management, 24 holdings, a 0.08% expense ratio, a 1.32% trailing dividend yield.
Portfolio overlap between SPY and XLC
The two portfolios are largely distinct: 9.6% of the funds' weight sits in the same underlying holdings (24 common positions). Correlation tells you they move together; overlap tells you why.
| Common holding | Weight in SPY | Weight in XLC |
|---|---|---|
| GOOGL | 3.03% | 10.29% |
| GOOG | 2.42% | 8.22% |
| META | 1.91% | 16.73% |
| NFLX | 0.52% | 4.84% |
| VZ | 0.32% | 4.99% |
| DIS | 0.29% | 4.88% |
| T | 0.27% | 5.20% |
| CMCSA | 0.15% | 4.93% |
| TMUS | 0.13% | 4.53% |
| APP | 0.13% | 1.30% |
| WBD | 0.11% | 4.65% |
| TTWO | 0.06% | 4.14% |
| LYV | 0.04% | 4.39% |
| OMC | 0.04% | 4.52% |
| RDDT | 0.03% | 0.32% |
Largest positions held only by SPY: NVDA (7.68%), AAPL (6.96%), MSFT (5.58%), AMZN (3.85%), AVGO (2.55%). Only by XLC: .
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 | SPY | XLC |
|---|---|---|
| 2022 | -18.2% | -37.6% |
| 2023 | +26.2% | +52.8% |
| 2024 | +24.9% | +34.7% |
| 2025 | +17.7% | +23.1% |
| 2026 | +13.7% | -4.8% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are SPY and XLC good diversifiers for each other?
No: a correlation of 0.82 means SPY and XLC tend to fall together, which is precisely when diversification is supposed to help.
FAQ
What is the correlation between SPY and XLC?
Using weekly returns as of 2026-08-27: 0.82 over 3 years, with 0.74 over the last year and 0.83 over 5 years.
Is XLC a good diversifier for SPY?
No: a correlation of 0.82 means SPY and XLC tend to fall together, which is precisely when diversification is supposed to help.
How much do SPY and XLC overlap?
9.6% by weight, across 24 common holdings, based on issuer-disclosed portfolios as of 2026-08-26.
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Hubs: SPY correlations · XLC correlations
