VNQ vs XLC: Correlation & Overlap
Measured on weekly returns over the past three years, Vanguard Real Estate ETF (VNQ) and Communication Services Select Sector SPDR Fund (XLC) carry a correlation of 0.36, a moderate link. 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 XLC?
Across a 3-year window, the weekly returns of VNQ and XLC correlate at 0.36, moderate. Lately the two have drifted apart, with the 1-year correlation at 0.20 versus 0.36 over 3 years. Stretching to 5 years gives 0.51, with an annualized covariance of 96.1 %².
Within VNQ's tracked universe of 149 assets, XLC comes in at #131 by 3-year correlation. On 12-month performance VNQ holds a 8.8-point edge, +10.3% against +1.5%. The relationship is regime-dependent: the rolling one-year correlation swung between 0.06 and 0.67 over the past three years, so this pair behaves very differently depending on the market environment.
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 XLC: side by side
| VNQ (Vanguard Real Estate ETF) | XLC (Communication Services Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +10.3% | +1.5% |
| 5-year return | +9.5% | +37.5% |
| Volatility (ann.) | 16.6% | 16.0% |
| Beta vs S&P 500 | 0.59 | 0.90 |
| Max drawdown (3Y) | -17.5% | -18.0% |
| Dividend yield | 3.51% | 1.32% |
| Expense ratio | 0.13% | 0.08% |
| Assets under management | $73.1B | $21.7B |
| Sector / category | ETF · Real Estate | Sector ETF |
VNQ is a Real Estate fund from Vanguard: $73.1B under management, 140 holdings, a 0.13% expense ratio, a 3.51% trailing dividend yield. On the fund side, XLC sits in the Communications category at State Street Investment Management, with $21.7B under management, 24 holdings, a 0.08% expense ratio, a 1.32% trailing dividend yield.
Portfolio overlap between VNQ and XLC
The two portfolios are largely distinct. Weighing the shared positions, 0% of the two funds is identical, spread across 0 common holdings. That shared book is a large part of why the returns line up.
Largest positions held only by VNQ: VRTPX (14.54%), WELL (8.54%), PLD (7.04%), EQIX (5.25%), AMT (4.22%). Only by XLC: META (16.73%), GOOGL (10.29%), GOOG (8.22%), T (5.20%), VZ (4.99%).
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 | XLC |
|---|---|---|
| 2022 | -26.3% | -37.6% |
| 2023 | +11.9% | +52.8% |
| 2024 | +4.8% | +34.7% |
| 2025 | +3.2% | +23.1% |
| 2026 | +12.5% | -4.8% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are VNQ and XLC good diversifiers for each other?
Yes, to a useful degree: a correlation of 0.36 leaves real independence between the two, which historically damped combined volatility.
FAQ
What is the correlation between VNQ and XLC?
As of 2026-08-27, the correlation of weekly returns between VNQ and XLC is 0.36 over 3 years, 0.20 over 1 year and 0.51 over 5 years.
Is XLC a good diversifier for VNQ?
Yes, to a useful degree: a correlation of 0.36 leaves real independence between the two, which historically damped combined volatility.
How much do VNQ and XLC overlap?
0% by weight, across 0 common holdings, based on issuer-disclosed portfolios as of 2026-07-31.
Use this data
$ curl https://www.pairbook.io/api/v1/pairs/vnq-vs-xlc.json
Markdown for the live badge, attribution link included:
[](https://www.pairbook.io/pair/vnq-vs-xlc/)
The core API is free. Terms and every endpoint in the API documentation.
Related comparisons
Hubs: VNQ correlations · XLC correlations
