VTI vs XLB: Correlation & Overlap
Vanguard Total Stock Market ETF (VTI) and Materials Select Sector SPDR Fund (XLB) show a strong relationship: their 3-year correlation of weekly returns is 0.65. The two funds also share 1.6% of their portfolios by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are VTI and XLB?
On 3 years of weekly data the VTI/XLB correlation comes out at 0.65, strong. The link has loosened recently: the 1-year correlation (0.38) runs below the 3-year figure (0.65). The 5-year figure is 0.76, and annualized covariance runs at 159.7 %².
Within VTI's tracked universe of 157 assets, XLB comes in at #64 by 3-year correlation. Neither side won the trailing year by much: +20.7% against +17.6%. The rolling one-year correlation moved between 0.41 and 0.88 over the past three years, a moderate range.
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.
VTI vs XLB: side by side
| VTI (Vanguard Total Stock Market ETF) | XLB (Materials Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +20.7% | +17.6% |
| 5-year return | +74.8% | +36.9% |
| Volatility (ann.) | 14.6% | 16.7% |
| Beta vs S&P 500 | 1.01 | 0.72 |
| Max drawdown (3Y) | -19.3% | -23.2% |
| Dividend yield | 1.06% | 1.68% |
| Expense ratio | 0.03% | 0.08% |
| Assets under management | $2,290.0B | $8.3B |
| Sector / category | ETF · US Large Cap | Sector ETF |
VTI is a Large Blend fund from Vanguard: $2,290.0B under management, 3140 holdings, a 0.03% expense ratio, a 1.06% 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 VTI and XLB
The two portfolios are largely distinct, with 24 holdings in common adding up to 1.6% of fund weight. Where correlation shows the co-movement, the overlap shows its source.
| Common holding | Weight in VTI | Weight in XLB |
|---|---|---|
| LIN | 0.31% | 12.94% |
| NEM | 0.14% | 8.02% |
| FCX | 0.13% | 6.48% |
| SHW | 0.11% | 4.87% |
| ECL | 0.10% | 4.80% |
| APD | 0.09% | 4.71% |
| CRH | 0.09% | 4.12% |
| NUE | 0.08% | 4.28% |
| CTVA | 0.07% | 4.72% |
| VMC | 0.05% | 4.26% |
| STLD | 0.05% | 3.73% |
| MLM | 0.04% | 4.09% |
| PPG | 0.03% | 3.32% |
| SW | 0.03% | 3.39% |
| PKG | 0.03% | 2.85% |
Largest positions held only by VTI: NVDA (6.42%), AAPL (6.31%), MSFT (4.80%), AMZN (3.66%), GOOGL (2.91%). Only by XLB: AMCR (2.84%), 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 | VTI | XLB |
|---|---|---|
| 2022 | -19.5% | -12.3% |
| 2023 | +26.0% | +12.5% |
| 2024 | +23.8% | +0.1% |
| 2025 | +17.1% | +9.9% |
| 2026 | +14.2% | +18.3% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are VTI and XLB good diversifiers for each other?
Only partially. A correlation of 0.65 means VTI 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 VTI and XLB?
The VTI/XLB correlation stands at 0.65 on a 3-year window (1 year: 0.38, 5 years: 0.76), computed from weekly returns as of 2026-08-27.
Is XLB a good diversifier for VTI?
Only partially. A correlation of 0.65 means VTI and XLB share most of their swings. Pairing them dampens volatility somewhat, but it will not protect against a common drawdown.
How much do VTI and XLB overlap?
1.6% by weight, across 24 common holdings, based on issuer-disclosed portfolios as of 2026-07-31.
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Related comparisons
Hubs: VTI correlations · XLB correlations
