VNQ vs XLRE: Correlation & Overlap
Vanguard Real Estate ETF (VNQ) and Real Estate Select Sector SPDR Fund (XLRE) show a very strong relationship: their 3-year correlation of weekly returns is 0.99. By holdings, the two funds overlap 60.5% by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are VNQ and XLRE?
On 3 years of weekly data the VNQ/XLRE correlation comes out at 0.99, very strong, meaning they move nearly in lockstep. Recent behaviour matches the longer record: 0.99 over 1 year against 0.99 over 3. The 5-year figure is 0.99, and annualized covariance runs at 274.7 %².
In VNQ's tracked universe of 149 assets, XLRE sits right near the top at #1. Twelve-month performance is nearly a tie, at +10.3% for VNQ and +9.5% for XLRE. The rolling one-year correlation stayed in a tight band between 0.99 and 1.00 over the past three years, which points to a structural rather than episodic relationship.
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 XLRE: side by side
| VNQ (Vanguard Real Estate ETF) | XLRE (Real Estate Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +10.3% | +9.5% |
| 5-year return | +9.5% | +11.4% |
| Volatility (ann.) | 16.6% | 16.7% |
| Beta vs S&P 500 | 0.59 | 0.57 |
| Max drawdown (3Y) | -17.5% | -16.6% |
| Dividend yield | 3.51% | 3.12% |
| Expense ratio | 0.13% | 0.08% |
| Assets under management | $73.1B | $8.6B |
| Sector / category | ETF · Real Estate | Sector ETF |
On the fund side, VNQ sits in the Real Estate category at Vanguard, with $73.1B under management, 140 holdings, a 0.13% expense ratio, a 3.51% trailing dividend yield. On the fund side, XLRE sits in the Real Estate category at State Street Investment Management, with $8.6B under management, 31 holdings, a 0.08% expense ratio, a 3.12% trailing dividend yield.
Portfolio overlap between VNQ and XLRE
The two portfolios overlap heavily: 60.5% of the funds' weight sits in the same underlying holdings (29 common positions). Correlation tells you they move together; overlap tells you why.
| Common holding | Weight in VNQ | Weight in XLRE |
|---|---|---|
| WELL | 8.54% | 11.43% |
| PLD | 7.04% | 9.06% |
| EQIX | 5.25% | 7.14% |
| AMT | 4.22% | 5.49% |
| SPG | 3.89% | 4.72% |
| DLR | 3.38% | 5.01% |
| O | 3.08% | 4.46% |
| PSA | 2.84% | 4.63% |
| VTR | 2.32% | 4.59% |
| CBRE | 2.26% | 4.45% |
| IRM | 1.90% | 3.65% |
| CCI | 1.74% | 3.33% |
| EXR | 1.63% | 3.08% |
| VICI | 1.38% | 2.87% |
| SBAC | 1.00% | 1.99% |
Largest positions held only by VNQ: VRTPX (14.54%), AVB (1.35%), EQR (1.17%), JLL (0.87%), WPC (0.84%). Only by XLRE: VMRK (4.96%), XARU6 (0.00%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-07-31. Top 15 common positions shown.
Year-by-year returns
| Year | VNQ | XLRE |
|---|---|---|
| 2022 | -26.3% | -26.2% |
| 2023 | +11.9% | +12.4% |
| 2024 | +4.8% | +5.1% |
| 2025 | +3.2% | +2.6% |
| 2026 | +12.5% | +12.4% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are VNQ and XLRE good diversifiers for each other?
No. With a correlation of 0.99, VNQ and XLRE move nearly in lockstep, so holding both adds very little diversification. They also hold much of the same portfolio (60.5% overlap), so the exposure is doubly redundant.
FAQ
What is the correlation between VNQ and XLRE?
As of 2026-08-27, the correlation of weekly returns between VNQ and XLRE is 0.99 over 3 years, 0.99 over 1 year and 0.99 over 5 years.
Is XLRE a good diversifier for VNQ?
No. With a correlation of 0.99, VNQ and XLRE move nearly in lockstep, so holding both adds very little diversification. They also hold much of the same portfolio (60.5% overlap), so the exposure is doubly redundant.
How much do VNQ and XLRE overlap?
Per the issuers' own portfolio disclosures (2026-07-31), the overlap is 60.5% by weight over 29 common positions.
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Related comparisons
Hubs: VNQ correlations · XLRE correlations
