VIG vs XLY: Correlation & Overlap
How closely do Vanguard Dividend Appreciation ETF (VIG) and Consumer Discretionary Select Sector SPDR Fund (XLY) trade together? Their weekly returns over three years give a correlation of 0.74, which is strong. The two funds also share 3.9% of their portfolios by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are VIG and XLY?
Across a 3-year window, the weekly returns of VIG and XLY correlate at 0.74, strong. The past 12 months show a weaker link (0.62) than the 3-year average (0.74). Stretching to 5 years gives 0.79, with an annualized covariance of 173.6 %².
Within VIG's tracked universe of 106 assets, XLY comes in at #30 by 3-year correlation. The last year tells two different stories: VIG led by 17.2 percentage points, +17.1% for VIG against -0.1% for XLY. The rolling one-year correlation stayed in a tight band between 0.63 and 0.85 over the past three years, which points to a structural rather than episodic relationship. One caveat on sizing: XLY is 1.7 times as volatile as the other leg, so an equal-dollar split is far from equal-risk.
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.
VIG vs XLY: side by side
| VIG (Vanguard Dividend Appreciation ETF) | XLY (Consumer Discretionary Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +17.1% | -0.1% |
| 5-year return | +64.0% | +31.8% |
| Volatility (ann.) | 11.9% | 19.7% |
| Beta vs S&P 500 | 0.74 | 1.15 |
| Max drawdown (3Y) | -15.0% | -26.0% |
| Dividend yield | 1.50% | 0.78% |
| Expense ratio | 0.04% | 0.08% |
| Assets under management | $130.9B | $22.5B |
| Sector / category | ETF · Dividend | Sector ETF |
VIG, Vanguard's Large Blend fund, carries $130.9B under management, 333 holdings, a 0.04% expense ratio, a 1.50% 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 VIG and XLY
The two portfolios are largely distinct, with 9 holdings in common adding up to 3.9% of fund weight. Where correlation shows the co-movement, the overlap shows its source.
| Common holding | Weight in VIG | Weight in XLY |
|---|---|---|
| HD | 1.43% | 5.54% |
| MCD | 0.83% | 4.11% |
| SBUX | 0.52% | 3.08% |
| LOW | 0.51% | 2.94% |
| NKE | 0.22% | 1.15% |
| DHI | 0.16% | 0.98% |
| WSM | 0.12% | 0.70% |
| TSCO | 0.07% | 0.46% |
| DPZ | 0.05% | 0.26% |
Largest positions held only by VIG: AVGO (4.65%), AAPL (4.47%), MSFT (4.35%), JPM (4.09%), LLY (3.94%). Only by XLY: AMZN (24.32%), TSLA (16.18%), BKNG (4.04%), TJX (3.55%), DASH (2.24%).
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 | VIG | XLY |
|---|---|---|
| 2022 | -9.8% | -36.3% |
| 2023 | +14.5% | +39.6% |
| 2024 | +17.0% | +26.5% |
| 2025 | +14.2% | +7.4% |
| 2026 | +11.6% | -2.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are VIG and XLY good diversifiers for each other?
Somewhat, no more. With 0.74 correlation, most large moves hit both names, and the diversification benefit stays modest.
FAQ
What is the correlation between VIG and XLY?
The VIG/XLY correlation stands at 0.74 on a 3-year window (1 year: 0.62, 5 years: 0.79), computed from weekly returns as of 2026-08-27.
Is XLY a good diversifier for VIG?
Somewhat, no more. With 0.74 correlation, most large moves hit both names, and the diversification benefit stays modest.
How much do VIG and XLY overlap?
The two funds share 9 holdings amounting to 3.9% of weight, per issuer portfolio files dated 2026-07-31.
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