VOO vs XLB: Correlation & Overlap
How closely do Vanguard S&P 500 ETF (VOO) and Materials Select Sector SPDR Fund (XLB) trade together? Their weekly returns over three years give a correlation of 0.62, which is strong. The two funds also share 1.8% of their portfolios by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are VOO and XLB?
Over the past 3 years, VOO and XLB moved with a correlation of 0.62, which is strong. Lately the two have drifted apart, with the 1-year correlation at 0.33 versus 0.62 over 3 years. Over 5 years the correlation is 0.74, and the annualized covariance of weekly returns is 149.3 %².
Among the 124 assets we track against VOO, XLB ranks #66 by 3-year correlation. Twelve-month performance is nearly a tie, at +20.6% for VOO and +17.6% for XLB. Do not treat this figure as fixed: across three years the rolling one-year correlation ranged all the way from 0.36 to 0.86.
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.
VOO vs XLB: side by side
| VOO (Vanguard S&P 500 ETF) | XLB (Materials Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +20.6% | +17.6% |
| 5-year return | +83.0% | +36.9% |
| Volatility (ann.) | 14.4% | 16.7% |
| Beta vs S&P 500 | 0.99 | 0.72 |
| Max drawdown (3Y) | -18.7% | -23.2% |
| Dividend yield | 1.07% | 1.68% |
| Expense ratio | 0.03% | 0.08% |
| Assets under management | $1,686.9B | $8.3B |
| Sector / category | ETF · US Large Cap | Sector ETF |
VOO, Vanguard's Large Blend fund, carries $1,686.9B under management, 503 holdings, a 0.03% expense ratio, a 1.07% trailing dividend yield. XLB is a Natural Resources fund from State Street Investment Management: $8.3B under management, 26 holdings, a 0.08% expense ratio, a 1.68% trailing dividend yield.
Portfolio overlap between VOO and XLB
The two portfolios are largely distinct: 1.8% of the funds' weight sits in the same underlying holdings (25 common positions). Correlation tells you they move together; overlap tells you why.
| Common holding | Weight in VOO | Weight in XLB |
|---|---|---|
| LIN | 0.34% | 12.94% |
| NEM | 0.16% | 8.02% |
| FCX | 0.14% | 6.48% |
| SHW | 0.12% | 4.87% |
| ECL | 0.11% | 4.80% |
| APD | 0.10% | 4.71% |
| CRH | 0.10% | 4.12% |
| NUE | 0.09% | 4.28% |
| CTVA | 0.08% | 4.72% |
| VMC | 0.05% | 4.26% |
| STLD | 0.05% | 3.73% |
| MLM | 0.05% | 4.09% |
| PPG | 0.04% | 3.32% |
| SW | 0.04% | 3.39% |
| DOW | 0.03% | 2.85% |
Largest positions held only by VOO: NVDA (7.56%), AAPL (7.05%), MSFT (5.37%), AMZN (4.13%), GOOGL (3.25%). Only by XLB: IXDU6 (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 | VOO | XLB |
|---|---|---|
| 2022 | -18.2% | -12.3% |
| 2023 | +26.3% | +12.5% |
| 2024 | +25.0% | +0.1% |
| 2025 | +17.8% | +9.9% |
| 2026 | +13.7% | +18.3% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are VOO and XLB good diversifiers for each other?
Only partially. A correlation of 0.62 means VOO and XLB 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 VOO and XLB?
Using weekly returns as of 2026-08-27: 0.62 over 3 years, with 0.33 over the last year and 0.74 over 5 years.
Is XLB a good diversifier for VOO?
Only partially. A correlation of 0.62 means VOO and XLB share most of their swings. Pairing them dampens volatility somewhat, but it will not protect against a common drawdown.
How much do VOO and XLB overlap?
The two funds share 25 holdings amounting to 1.8% of weight, per issuer portfolio files dated 2026-07-31.
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Hubs: VOO correlations · XLB correlations
