VNQ vs XLE: Correlation & Overlap
Vanguard Real Estate ETF (VNQ) and Energy Select Sector SPDR Fund (XLE) show a weak relationship: their 3-year correlation of weekly returns is 0.27. Looking through to holdings, 0% 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 VNQ and XLE?
On 3 years of weekly data the VNQ/XLE correlation comes out at 0.27, weak. Lately the two have drifted apart, with the 1-year correlation at -0.01 versus 0.27 over 3 years. The 5-year figure is 0.27, and annualized covariance runs at 104.0 %².
By 3-year correlation, XLE places #138 of the 149 assets tracked against VNQ. The last year tells two different stories: XLE led by 33.7 percentage points, +10.3% for VNQ against +44.0% for XLE. This link changes with the market regime, having swung between -0.10 and 0.61 on a rolling one-year basis.
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 XLE: side by side
| VNQ (Vanguard Real Estate ETF) | XLE (Energy Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +10.3% | +44.0% |
| 5-year return | +9.5% | +206.7% |
| Volatility (ann.) | 16.6% | 23.1% |
| Beta vs S&P 500 | 0.59 | 0.27 |
| Max drawdown (3Y) | -17.5% | -20.1% |
| Dividend yield | 3.51% | 2.55% |
| Expense ratio | 0.13% | 0.08% |
| Assets under management | $73.1B | $39.2B |
| 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. XLE is an Equity Energy fund from State Street Investment Management: $39.2B under management, 22 holdings, a 0.08% expense ratio, a 2.55% trailing dividend yield.
Portfolio overlap between VNQ and XLE
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 XLE: XOM (20.03%), CVX (14.84%), COP (6.30%), MPC (5.40%), PSX (5.37%).
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 | XLE |
|---|---|---|
| 2022 | -26.3% | +64.3% |
| 2023 | +11.9% | -0.6% |
| 2024 | +4.8% | +5.6% |
| 2025 | +3.2% | +7.9% |
| 2026 | +12.5% | +41.2% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are VNQ and XLE good diversifiers for each other?
Yes, to a useful degree: a correlation of 0.27 leaves real independence between the two, which historically damped combined volatility.
FAQ
What is the correlation between VNQ and XLE?
Using weekly returns as of 2026-08-27: 0.27 over 3 years, with -0.01 over the last year and 0.27 over 5 years.
Is XLE a good diversifier for VNQ?
Yes, to a useful degree: a correlation of 0.27 leaves real independence between the two, which historically damped combined volatility.
How much do VNQ and XLE overlap?
The two funds share 0 holdings amounting to 0% of weight, per issuer portfolio files dated 2026-07-31.
Use this data
$ curl https://www.pairbook.io/api/v1/pairs/vnq-vs-xle.json
Markdown for the live badge, attribution link included:
[](https://www.pairbook.io/pair/vnq-vs-xle/)
Free with attribution; caching and terms are described in the API documentation.
Related comparisons
Hubs: VNQ correlations · XLE correlations
