VNQ vs XLI: Correlation & Overlap
Vanguard Real Estate ETF (VNQ) and Industrial Select Sector SPDR Fund (XLI) show a strong relationship: their 3-year correlation of weekly returns is 0.62. By holdings, the two funds overlap 0% by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are VNQ and XLI?
Across a 3-year window, the weekly returns of VNQ and XLI correlate at 0.62, strong. The link has loosened recently: the 1-year correlation (0.51) runs below the 3-year figure (0.62). Stretching to 5 years gives 0.72, with an annualized covariance of 161.9 %².
Within VNQ's tracked universe of 149 assets, XLI comes in at #79 by 3-year correlation. The trailing year gives XLI the advantage: +10.3% versus +18.3%, a 8.0-point spread. On a rolling one-year basis the correlation drifted between 0.52 and 0.84, 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 XLI: side by side
| VNQ (Vanguard Real Estate ETF) | XLI (Industrial Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +10.3% | +18.3% |
| 5-year return | +9.5% | +84.0% |
| Volatility (ann.) | 16.6% | 15.7% |
| Beta vs S&P 500 | 0.59 | 0.89 |
| Max drawdown (3Y) | -17.5% | -18.5% |
| Dividend yield | 3.51% | 1.15% |
| Expense ratio | 0.13% | 0.08% |
| Assets under management | $73.1B | $32.9B |
| 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. XLI is an Industrials fund from State Street Investment Management: $32.9B under management, 83 holdings, a 0.08% expense ratio, a 1.15% trailing dividend yield.
Portfolio overlap between VNQ and XLI
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 XLI: CAT (6.68%), GE (6.52%), RTX (5.04%), GEV (4.52%), UNP (3.25%).
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 | XLI |
|---|---|---|
| 2022 | -26.3% | -5.6% |
| 2023 | +11.9% | +18.1% |
| 2024 | +4.8% | +17.3% |
| 2025 | +3.2% | +19.3% |
| 2026 | +12.5% | +15.9% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are VNQ and XLI good diversifiers for each other?
Only partially. A correlation of 0.62 means VNQ and XLI 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 VNQ and XLI?
The VNQ/XLI correlation stands at 0.62 on a 3-year window (1 year: 0.51, 5 years: 0.72), computed from weekly returns as of 2026-08-27.
Is XLI a good diversifier for VNQ?
Only partially. A correlation of 0.62 means VNQ and XLI share most of their swings. Pairing them dampens volatility somewhat, but it will not protect against a common drawdown.
How much do VNQ and XLI 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-xli.json
Drop this badge in a README or notebook; it updates with the data:
[](https://www.pairbook.io/pair/vnq-vs-xli/)
No key needed, free to use. Full endpoint list in the API documentation.
Related comparisons
Hubs: VNQ correlations · XLI correlations
