VOO vs XLF: Correlation & Overlap
Measured on weekly returns over the past three years, Vanguard S&P 500 ETF (VOO) and Financial Select Sector SPDR Fund (XLF) carry a correlation of 0.75, a strong link. By holdings, the two funds overlap 12.4% by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are VOO and XLF?
Over the past 3 years, VOO and XLF moved with a correlation of 0.75, which is strong. The link has loosened recently: the 1-year correlation (0.59) runs below the 3-year figure (0.75). Over 5 years the correlation is 0.80, and the annualized covariance of weekly returns is 174.0 %².
Among the 124 assets we track against VOO, XLF ranks #47 by 3-year correlation. Over the last 12 months VOO came out ahead by 11.3 percentage points (+20.6% against +9.3%). On a rolling one-year basis the correlation drifted between 0.54 and 0.86, 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.
VOO vs XLF: side by side
| VOO (Vanguard S&P 500 ETF) | XLF (Financial Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +20.6% | +9.3% |
| 5-year return | +83.0% | +64.2% |
| Volatility (ann.) | 14.4% | 16.2% |
| Beta vs S&P 500 | 0.99 | 0.84 |
| Max drawdown (3Y) | -18.7% | -15.5% |
| Dividend yield | 1.07% | 1.42% |
| Expense ratio | 0.03% | 0.08% |
| Assets under management | $1,686.9B | $57.9B |
| Sector / category | ETF · US Large Cap | Sector ETF |
On the fund side, VOO sits in the Large Blend category at Vanguard, with $1,686.9B under management, 503 holdings, a 0.03% expense ratio, a 1.07% trailing dividend yield. XLF is a Financial fund from State Street Investment Management: $57.9B under management, 77 holdings, a 0.08% expense ratio, a 1.42% trailing dividend yield.
Portfolio overlap between VOO and XLF
The two portfolios are largely distinct. Weighing the shared positions, 12.4% of the two funds is identical, spread across 76 common holdings. That shared book is a large part of why the returns line up.
| Common holding | Weight in VOO | Weight in XLF |
|---|---|---|
| JPM | 1.47% | 11.61% |
| BRK.B | 1.46% | 11.25% |
| V | 0.93% | 7.74% |
| MA | 0.72% | 5.87% |
| BAC | 0.63% | 4.94% |
| GS | 0.45% | 3.73% |
| WFC | 0.41% | 3.17% |
| MS | 0.39% | 3.12% |
| C | 0.34% | 2.77% |
| AXP | 0.28% | 2.17% |
| SCHW | 0.27% | 2.17% |
| BLK | 0.24% | 2.06% |
| COF | 0.20% | 1.64% |
| CB | 0.20% | 1.51% |
| SPGI | 0.19% | 1.61% |
Largest positions held only by VOO: NVDA (7.56%), AAPL (7.05%), MSFT (5.37%), AMZN (4.13%), GOOGL (3.25%). Only by XLF: IXAU6 (0.01%).
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 | XLF |
|---|---|---|
| 2022 | -18.2% | -10.6% |
| 2023 | +26.3% | +12.0% |
| 2024 | +25.0% | +30.6% |
| 2025 | +17.8% | +14.9% |
| 2026 | +13.7% | +6.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are VOO and XLF good diversifiers for each other?
Somewhat, no more. With 0.75 correlation, most large moves hit both names, and the diversification benefit stays modest.
FAQ
What is the correlation between VOO and XLF?
As of 2026-08-27, the correlation of weekly returns between VOO and XLF is 0.75 over 3 years, 0.59 over 1 year and 0.80 over 5 years.
Is XLF a good diversifier for VOO?
Somewhat, no more. With 0.75 correlation, most large moves hit both names, and the diversification benefit stays modest.
How much do VOO and XLF overlap?
12.4% by weight, across 76 common holdings, based on issuer-disclosed portfolios as of 2026-07-31.
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