VEA vs XLB: Correlation & Overlap
Measured on weekly returns over the past three years, Vanguard FTSE Developed Markets ETF (VEA) and Materials Select Sector SPDR Fund (XLB) carry a correlation of 0.76, a strong link. The two funds also share 0.0% of their portfolios by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are VEA and XLB?
On 3 years of weekly data the VEA/XLB correlation comes out at 0.76, strong. The relationship has been stable: the 1-year correlation (0.69) sits close to the 3-year figure. The 5-year figure is 0.81, and annualized covariance runs at 191.7 %².
Within VEA's tracked universe of 107 assets, XLB comes in at #27 by 3-year correlation. Over the last 12 months VEA came out ahead by 10.9 percentage points (+28.5% against +17.6%). Stability stands out here, with the rolling one-year correlation confined to 0.70 through 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.
VEA vs XLB: side by side
| VEA (Vanguard FTSE Developed Markets ETF) | XLB (Materials Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +28.5% | +17.6% |
| 5-year return | +63.5% | +36.9% |
| Volatility (ann.) | 15.1% | 16.7% |
| Beta vs S&P 500 | 0.79 | 0.72 |
| Max drawdown (3Y) | -13.5% | -23.2% |
| Dividend yield | 2.56% | 1.68% |
| Expense ratio | 0.03% | 0.08% |
| Assets under management | $314.9B | $8.3B |
| Sector / category | ETF · International | Sector ETF |
On the fund side, VEA sits in the Foreign Large Blend category at Vanguard, with $314.9B under management, 3769 holdings, a 0.03% expense ratio, a 2.56% trailing dividend yield. XLB is a Natural Resources fund from State Street Investment Management: $8.3B under management, 26 holdings, a 0.08% expense ratio, a 1.68% trailing dividend yield.
Portfolio overlap between VEA and XLB
The two portfolios are largely distinct: 0.0% of the funds' weight sits in the same underlying holdings (5 common positions). Correlation tells you they move together; overlap tells you why.
| Common holding | Weight in VEA | Weight in XLB |
|---|---|---|
| NEM | 0.01% | 8.02% |
| DOW | 0.01% | 2.85% |
| IP | 0.01% | 2.86% |
| SW | 0.01% | 3.39% |
| LIN | 0.00% | 12.94% |
Largest positions held only by VEA: 005930 (2.53%), ASML (2.00%), 000660 (1.98%), HSBA (1.15%), ROP (0.97%). Only by XLB: FCX (6.48%), SHW (4.87%), ECL (4.80%), CTVA (4.72%), APD (4.71%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-07-31. Top 5 common positions shown.
Year-by-year returns
| Year | VEA | XLB |
|---|---|---|
| 2022 | -15.3% | -12.3% |
| 2023 | +17.9% | +12.5% |
| 2024 | +3.1% | +0.1% |
| 2025 | +35.2% | +9.9% |
| 2026 | +18.3% | +18.3% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are VEA and XLB good diversifiers for each other?
Somewhat, no more. With 0.76 correlation, most large moves hit both names, and the diversification benefit stays modest.
FAQ
What is the correlation between VEA and XLB?
Using weekly returns as of 2026-08-27: 0.76 over 3 years, with 0.69 over the last year and 0.81 over 5 years.
Is XLB a good diversifier for VEA?
Somewhat, no more. With 0.76 correlation, most large moves hit both names, and the diversification benefit stays modest.
How much do VEA and XLB overlap?
Per the issuers' own portfolio disclosures (2026-07-31), the overlap is 0.0% by weight over 5 common positions.
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Related comparisons
Hubs: VEA correlations · XLB correlations
