VEA vs XLF: Correlation & Overlap
Vanguard FTSE Developed Markets ETF (VEA) and Financial Select Sector SPDR Fund (XLF) show a moderate relationship: their 3-year correlation of weekly returns is 0.58. Looking through to holdings, 0.4% 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 VEA and XLF?
Over the past 3 years, VEA and XLF moved with a correlation of 0.58, which is moderate. Lately the two have drifted apart, with the 1-year correlation at 0.39 versus 0.58 over 3 years. Over 5 years the correlation is 0.70, and the annualized covariance of weekly returns is 142.6 %².
By 3-year correlation, XLF places #68 of the 107 assets tracked against VEA. Correlation aside, the last 12 months split them widely, with VEA ahead by 19.2 points (+28.5% versus +9.3%). On a rolling one-year basis the correlation drifted between 0.39 and 0.83, a moderate band.
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 XLF: side by side
| VEA (Vanguard FTSE Developed Markets ETF) | XLF (Financial Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +28.5% | +9.3% |
| 5-year return | +63.5% | +64.2% |
| Volatility (ann.) | 15.1% | 16.2% |
| Beta vs S&P 500 | 0.79 | 0.84 |
| Max drawdown (3Y) | -13.5% | -15.5% |
| Dividend yield | 2.56% | 1.42% |
| Expense ratio | 0.03% | 0.08% |
| Assets under management | $314.9B | $57.9B |
| Sector / category | ETF · International | Sector ETF |
VEA, Vanguard's Foreign Large Blend fund, carries $314.9B under management, 3769 holdings, a 0.03% expense ratio, a 2.56% trailing dividend yield. XLF is a Financial fund from State Street Investment Management: $57.9B under management, 77 holdings, a 0.08% expense ratio, a 1.42% trailing dividend yield.
Portfolio overlap between VEA and XLF
The two portfolios are largely distinct: 0.4% of the funds' weight sits in the same underlying holdings (9 common positions). Correlation tells you they move together; overlap tells you why.
| Common holding | Weight in VEA | Weight in XLF |
|---|---|---|
| PRU | 0.13% | 0.51% |
| L | 0.08% | 0.23% |
| ALL | 0.08% | 0.82% |
| HBAN | 0.06% | 0.42% |
| KEY | 0.03% | 0.25% |
| AMP | 0.02% | 0.61% |
| BEN | 0.02% | 0.13% |
| RF | 0.00% | 0.32% |
| COF | 0.00% | 1.64% |
Largest positions held only by VEA: 005930 (2.53%), ASML (2.00%), 000660 (1.98%), HSBA (1.15%), ROP (0.97%). Only by XLF: JPM (11.61%), BRK.B (11.25%), V (7.74%), MA (5.87%), BAC (4.94%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-07-31. Top 9 common positions shown.
Year-by-year returns
| Year | VEA | XLF |
|---|---|---|
| 2022 | -15.3% | -10.6% |
| 2023 | +17.9% | +12.0% |
| 2024 | +3.1% | +30.6% |
| 2025 | +35.2% | +14.9% |
| 2026 | +18.3% | +6.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are VEA and XLF good diversifiers for each other?
Only partially. A correlation of 0.58 means VEA and XLF share most of their swings. Pairing them dampens volatility somewhat, but it will not protect against a common drawdown.
FAQ
What is the correlation between VEA and XLF?
The VEA/XLF correlation stands at 0.58 on a 3-year window (1 year: 0.39, 5 years: 0.70), computed from weekly returns as of 2026-08-27.
Is XLF a good diversifier for VEA?
Only partially. A correlation of 0.58 means VEA and XLF share most of their swings. Pairing them dampens volatility somewhat, but it will not protect against a common drawdown.
How much do VEA and XLF overlap?
The two funds share 9 holdings amounting to 0.4% of weight, per issuer portfolio files dated 2026-07-31.
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