VNQ vs XLB: Correlation & Overlap
How closely do Vanguard Real Estate ETF (VNQ) and Materials Select Sector SPDR Fund (XLB) trade together? Their weekly returns over three years give a correlation of 0.64, which is strong. The two funds also share 0% of their portfolios by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are VNQ and XLB?
Over the past 3 years, VNQ and XLB moved with a correlation of 0.64, which is strong. The link has loosened recently: the 1-year correlation (0.48) runs below the 3-year figure (0.64). Over 5 years the correlation is 0.72, and the annualized covariance of weekly returns is 178.8 %².
By 3-year correlation, XLB places #74 of the 149 assets tracked against VNQ. On 12-month performance XLB holds a 7.3-point edge, +10.3% against +17.6%. On a rolling one-year basis the correlation drifted between 0.50 and 0.82, 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.
VNQ vs XLB: side by side
| VNQ (Vanguard Real Estate ETF) | XLB (Materials Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +10.3% | +17.6% |
| 5-year return | +9.5% | +36.9% |
| Volatility (ann.) | 16.6% | 16.7% |
| Beta vs S&P 500 | 0.59 | 0.72 |
| Max drawdown (3Y) | -17.5% | -23.2% |
| Dividend yield | 3.51% | 1.68% |
| Expense ratio | 0.13% | 0.08% |
| Assets under management | $73.1B | $8.3B |
| Sector / category | ETF · Real Estate | Sector ETF |
VNQ, Vanguard's Real Estate fund, carries $73.1B under management, 140 holdings, a 0.13% expense ratio, a 3.51% 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 VNQ and XLB
The two portfolios are largely distinct, with 0 holdings in common adding up to 0% of fund weight. Where correlation shows the co-movement, the overlap shows its source.
Largest positions held only by VNQ: VRTPX (14.54%), WELL (8.54%), PLD (7.04%), EQIX (5.25%), AMT (4.22%). Only by XLB: LIN (12.94%), NEM (8.02%), FCX (6.48%), SHW (4.87%), ECL (4.80%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-07-31.
Year-by-year returns
| Year | VNQ | XLB |
|---|---|---|
| 2022 | -26.3% | -12.3% |
| 2023 | +11.9% | +12.5% |
| 2024 | +4.8% | +0.1% |
| 2025 | +3.2% | +9.9% |
| 2026 | +12.5% | +18.3% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are VNQ and XLB good diversifiers for each other?
Somewhat, no more. With 0.64 correlation, most large moves hit both names, and the diversification benefit stays modest.
FAQ
What is the correlation between VNQ and XLB?
As of 2026-08-27, the correlation of weekly returns between VNQ and XLB is 0.64 over 3 years, 0.48 over 1 year and 0.72 over 5 years.
Is XLB a good diversifier for VNQ?
Somewhat, no more. With 0.64 correlation, most large moves hit both names, and the diversification benefit stays modest.
How much do VNQ and XLB overlap?
Per the issuers' own portfolio disclosures (2026-07-31), the overlap is 0% by weight over 0 common positions.
Use this data
$ curl https://www.pairbook.io/api/v1/pairs/vnq-vs-xlb.json
Embed this badge (it refreshes with the data), with attribution:
[](https://www.pairbook.io/pair/vnq-vs-xlb/)
No key needed, free to use. Full endpoint list in the API documentation.
Related comparisons
Hubs: VNQ correlations · XLB correlations
