VEA vs XLY: Correlation & Overlap
How closely do Vanguard FTSE Developed Markets ETF (VEA) and Consumer Discretionary Select Sector SPDR Fund (XLY) trade together? Their weekly returns over three years give a correlation of 0.64, which is strong. Looking through to holdings, 0.2% 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 XLY?
Over the past 3 years, VEA and XLY moved with a correlation of 0.64, which is strong. Recent behaviour matches the longer record: 0.65 over 1 year against 0.64 over 3. Over 5 years the correlation is 0.70, and the annualized covariance of weekly returns is 191.1 %².
Within VEA's tracked universe of 107 assets, XLY comes in at #53 by 3-year correlation. The last year tells two different stories: VEA led by 28.6 percentage points, +28.5% for VEA against -0.1% for XLY. The rolling one-year correlation stayed in a tight band between 0.52 and 0.76 over the past three years, which points to a structural rather than episodic relationship.
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 XLY: side by side
| VEA (Vanguard FTSE Developed Markets ETF) | XLY (Consumer Discretionary Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +28.5% | -0.1% |
| 5-year return | +63.5% | +31.8% |
| Volatility (ann.) | 15.1% | 19.7% |
| Beta vs S&P 500 | 0.79 | 1.15 |
| Max drawdown (3Y) | -13.5% | -26.0% |
| Dividend yield | 2.56% | 0.78% |
| Expense ratio | 0.03% | 0.08% |
| Assets under management | $314.9B | $22.5B |
| 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. XLY is a Consumer Cyclical fund from State Street Investment Management: $22.5B under management, 47 holdings, a 0.08% expense ratio, a 0.78% trailing dividend yield.
Portfolio overlap between VEA and XLY
The two portfolios are largely distinct. Weighing the shared positions, 0.2% of the two funds is identical, spread across 5 common holdings. That shared book is a large part of why the returns line up.
| Common holding | Weight in VEA | Weight in XLY |
|---|---|---|
| TSCO | 0.13% | 0.46% |
| BBY | 0.02% | 0.43% |
| HAS | 0.00% | 0.32% |
| PHM | 0.00% | 0.62% |
| CCL | 0.00% | 0.82% |
Largest positions held only by VEA: 005930 (2.53%), ASML (2.00%), 000660 (1.98%), HSBA (1.15%), ROP (0.97%). Only by XLY: AMZN (24.32%), TSLA (16.18%), HD (5.54%), MCD (4.11%), BKNG (4.04%).
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 | XLY |
|---|---|---|
| 2022 | -15.3% | -36.3% |
| 2023 | +17.9% | +39.6% |
| 2024 | +3.1% | +26.5% |
| 2025 | +35.2% | +7.4% |
| 2026 | +18.3% | -2.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are VEA and XLY good diversifiers for each other?
Only partially. A correlation of 0.64 means VEA and XLY 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 XLY?
As of 2026-08-27, the correlation of weekly returns between VEA and XLY is 0.64 over 3 years, 0.65 over 1 year and 0.70 over 5 years.
Is XLY a good diversifier for VEA?
Only partially. A correlation of 0.64 means VEA and XLY share most of their swings. Pairing them dampens volatility somewhat, but it will not protect against a common drawdown.
How much do VEA and XLY overlap?
0.2% by weight, across 5 common holdings, based on issuer-disclosed portfolios as of 2026-07-31.
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Hubs: VEA correlations · XLY correlations
