VWO vs XLE: Correlation & Overlap
Vanguard FTSE Emerging Markets ETF (VWO) and Energy Select Sector SPDR Fund (XLE) show a near-zero relationship: their 3-year correlation of weekly returns is 0.05. By holdings, the two funds overlap 0.1% by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are VWO and XLE?
Over the past 3 years, VWO and XLE moved with a correlation of 0.05, which is near zero, meaning they move largely independently. The past 12 months show a weaker link (-0.35) than the 3-year average (0.05). Over 5 years the correlation is 0.15, and the annualized covariance of weekly returns is 19.1 %².
By 3-year correlation, XLE places #63 of the 73 assets tracked against VWO. The last year tells two different stories: XLE led by 22.4 percentage points, +21.6% for VWO against +44.0% for XLE. Do not treat this figure as fixed: across three years the rolling one-year correlation ranged all the way from -0.35 to 0.41. Note the risk asymmetry: XLE runs 1.5 times the annualized volatility of the other leg, so equal-weighting the two is not an equal-risk position.
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.
VWO vs XLE: side by side
| VWO (Vanguard FTSE Emerging Markets ETF) | XLE (Energy Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +21.6% | +44.0% |
| 5-year return | +38.2% | +206.7% |
| Volatility (ann.) | 15.2% | 23.1% |
| Beta vs S&P 500 | 0.75 | 0.27 |
| Max drawdown (3Y) | -17.4% | -20.1% |
| Dividend yield | 2.36% | 2.55% |
| Expense ratio | 0.06% | 0.08% |
| Assets under management | $162.0B | $39.2B |
| Sector / category | ETF · International | Sector ETF |
On the fund side, VWO sits in the Diversified Emerging Mkts category at Vanguard, with $162.0B under management, 4113 holdings, a 0.06% expense ratio, a 2.36% trailing dividend yield. XLE is an Equity Energy fund from State Street Investment Management: $39.2B under management, 22 holdings, a 0.08% expense ratio, a 2.55% trailing dividend yield.
Portfolio overlap between VWO and XLE
The two portfolios are largely distinct: 0.1% of the funds' weight sits in the same underlying holdings (1 common positions). Correlation tells you they move together; overlap tells you why.
| Common holding | Weight in VWO | Weight in XLE |
|---|---|---|
| HAL | 0.10% | 1.71% |
Largest positions held only by VWO: 2330 (18.65%), 700 (3.97%), 9988 (2.90%), 2454 (1.62%), 939 (1.07%). Only by XLE: XOM (20.03%), CVX (14.84%), COP (6.30%), MPC (5.40%), PSX (5.37%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-07-31. Top 1 common positions shown.
Year-by-year returns
| Year | VWO | XLE |
|---|---|---|
| 2022 | -18.0% | +64.3% |
| 2023 | +9.3% | -0.6% |
| 2024 | +10.6% | +5.6% |
| 2025 | +25.6% | +7.9% |
| 2026 | +13.6% | +41.2% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are VWO and XLE good diversifiers for each other?
Yes. With a correlation of 0.05, VWO and XLE have moved largely independently, which makes them a genuinely diversifying pair by historical standards.
FAQ
What is the correlation between VWO and XLE?
Using weekly returns as of 2026-08-27: 0.05 over 3 years, with -0.35 over the last year and 0.15 over 5 years.
Is XLE a good diversifier for VWO?
Yes. With a correlation of 0.05, VWO and XLE have moved largely independently, which makes them a genuinely diversifying pair by historical standards.
How much do VWO and XLE overlap?
The two funds share 1 holdings amounting to 0.1% of weight, per issuer portfolio files dated 2026-07-31.
Use this data
$ curl https://www.pairbook.io/api/v1/pairs/vwo-vs-xle.json
Markdown for the live badge, attribution link included:
[](https://www.pairbook.io/pair/vwo-vs-xle/)
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Hubs: VWO correlations · XLE correlations
