VNQ vs XLP: Correlation & Overlap
How closely do Vanguard Real Estate ETF (VNQ) and Consumer Staples Select Sector SPDR Fund (XLP) trade together? Their weekly returns over three years give a correlation of 0.58, which is moderate. 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 XLP?
Across a 3-year window, the weekly returns of VNQ and XLP correlate at 0.58, moderate. The relationship has been stable: the 1-year correlation (0.58) sits close to the 3-year figure. Stretching to 5 years gives 0.63, with an annualized covariance of 108.0 %².
Within VNQ's tracked universe of 149 assets, XLP comes in at #92 by 3-year correlation. Their 12-month results are close: +10.3% for VNQ against +8.3% for XLP. Stability stands out here, with the rolling one-year correlation confined to 0.47 through 0.71.
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 XLP: side by side
| VNQ (Vanguard Real Estate ETF) | XLP (Consumer Staples Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +10.3% | +8.3% |
| 5-year return | +9.5% | +34.7% |
| Volatility (ann.) | 16.6% | 11.1% |
| Beta vs S&P 500 | 0.59 | 0.23 |
| Max drawdown (3Y) | -17.5% | -9.7% |
| Dividend yield | 3.51% | 2.58% |
| Expense ratio | 0.13% | 0.08% |
| Assets under management | $73.1B | $14.6B |
| 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, XLP sits in the Consumer Defensive category at State Street Investment Management, with $14.6B under management, 35 holdings, a 0.08% expense ratio, a 2.58% trailing dividend yield.
Portfolio overlap between VNQ and XLP
The two portfolios are largely distinct: 0% of the funds' weight sits in the same underlying holdings (0 common positions). Correlation tells you they move together; overlap tells you why.
Largest positions held only by VNQ: VRTPX (14.54%), WELL (8.54%), PLD (7.04%), EQIX (5.25%), AMT (4.22%). Only by XLP: WMT (9.62%), COST (8.92%), KO (7.34%), PG (7.10%), PM (6.36%).
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 | XLP |
|---|---|---|
| 2022 | -26.3% | -0.8% |
| 2023 | +11.9% | -0.8% |
| 2024 | +4.8% | +12.2% |
| 2025 | +3.2% | +1.5% |
| 2026 | +12.5% | +10.9% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are VNQ and XLP good diversifiers for each other?
Only partially. A correlation of 0.58 means VNQ and XLP 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 XLP?
The VNQ/XLP correlation stands at 0.58 on a 3-year window (1 year: 0.58, 5 years: 0.63), computed from weekly returns as of 2026-08-27.
Is XLP a good diversifier for VNQ?
Only partially. A correlation of 0.58 means VNQ and XLP share most of their swings. Pairing them dampens volatility somewhat, but it will not protect against a common drawdown.
How much do VNQ and XLP 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-xlp.json
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[](https://www.pairbook.io/pair/vnq-vs-xlp/)
The core API is free. Terms and every endpoint in the API documentation.
Related comparisons
Hubs: VNQ correlations · XLP correlations
