VEA vs XLE: Correlation & Overlap
Measured on weekly returns over the past three years, Vanguard FTSE Developed Markets ETF (VEA) and Energy Select Sector SPDR Fund (XLE) carry a correlation of 0.12, a weak link. By holdings, the two funds overlap 0.1% by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are VEA and XLE?
Across a 3-year window, the weekly returns of VEA and XLE correlate at 0.12, weak. The link has loosened recently: the 1-year correlation (-0.33) runs below the 3-year figure (0.12). Stretching to 5 years gives 0.24, with an annualized covariance of 42.4 %².
Among the 107 assets we track against VEA, XLE ranks #97 by 3-year correlation. Correlation aside, the last 12 months split them widely, with XLE ahead by 15.5 points (+28.5% versus +44.0%). The relationship is regime-dependent: the rolling one-year correlation swung between -0.36 and 0.52 over the past three years, so this pair behaves very differently depending on the market environment. Risk is not evenly split, since XLE 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.
VEA vs XLE: side by side
| VEA (Vanguard FTSE Developed Markets ETF) | XLE (Energy Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +28.5% | +44.0% |
| 5-year return | +63.5% | +206.7% |
| Volatility (ann.) | 15.1% | 23.1% |
| Beta vs S&P 500 | 0.79 | 0.27 |
| Max drawdown (3Y) | -13.5% | -20.1% |
| Dividend yield | 2.56% | 2.55% |
| Expense ratio | 0.03% | 0.08% |
| Assets under management | $314.9B | $39.2B |
| 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. 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.
Portfolio overlap between VEA and XLE
The two portfolios are largely distinct, with 4 holdings in common adding up to 0.1% of fund weight. Where correlation shows the co-movement, the overlap shows its source.
Largest positions held only by VEA: 005930 (2.53%), ASML (2.00%), 000660 (1.98%), HSBA (1.15%), ROP (0.97%). Only by XLE: XOM (20.03%), CVX (14.84%), COP (6.30%), MPC (5.40%), PSX (5.37%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-07-31. Top 4 common positions shown.
Year-by-year returns
| Year | VEA | XLE |
|---|---|---|
| 2022 | -15.3% | +64.3% |
| 2023 | +17.9% | -0.6% |
| 2024 | +3.1% | +5.6% |
| 2025 | +35.2% | +7.9% |
| 2026 | +18.3% | +41.2% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are VEA and XLE good diversifiers for each other?
Yes: at 0.12, the two have gone their own ways historically, which is what genuine diversification looks like.
FAQ
What is the correlation between VEA and XLE?
The VEA/XLE correlation stands at 0.12 on a 3-year window (1 year: -0.33, 5 years: 0.24), computed from weekly returns as of 2026-08-27.
Is XLE a good diversifier for VEA?
Yes: at 0.12, the two have gone their own ways historically, which is what genuine diversification looks like.
How much do VEA and XLE overlap?
Per the issuers' own portfolio disclosures (2026-07-31), the overlap is 0.1% by weight over 4 common positions.
Use this data
$ curl https://www.pairbook.io/api/v1/pairs/vea-vs-xle.json
Markdown for the live badge, attribution link included:
[](https://www.pairbook.io/pair/vea-vs-xle/)
Free with attribution; caching and terms are described in the API documentation.
Related comparisons
Hubs: VEA correlations · XLE correlations
