VWO vs XLY: Correlation & Overlap
Vanguard FTSE Emerging Markets ETF (VWO) and Consumer Discretionary Select Sector SPDR Fund (XLY) show a strong relationship: their 3-year correlation of weekly returns is 0.61. By holdings, the two funds overlap 0.0% by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are VWO and XLY?
Over the past 3 years, VWO and XLY moved with a correlation of 0.61, which is strong. Recent behaviour matches the longer record: 0.67 over 1 year against 0.61 over 3. Over 5 years the correlation is 0.57, and the annualized covariance of weekly returns is 181.7 %².
By 3-year correlation, XLY places #41 of the 73 assets tracked against VWO. Their recent paths diverged sharply: over the last 12 months VWO outperformed by 21.7 percentage points (+21.6% for VWO against -0.1% for XLY). On a rolling one-year basis the correlation drifted between 0.44 and 0.73, 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.
VWO vs XLY: side by side
| VWO (Vanguard FTSE Emerging Markets ETF) | XLY (Consumer Discretionary Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +21.6% | -0.1% |
| 5-year return | +38.2% | +31.8% |
| Volatility (ann.) | 15.2% | 19.7% |
| Beta vs S&P 500 | 0.75 | 1.15 |
| Max drawdown (3Y) | -17.4% | -26.0% |
| Dividend yield | 2.36% | 0.78% |
| Expense ratio | 0.06% | 0.08% |
| Assets under management | $162.0B | $22.5B |
| 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. XLY is a Consumer Cyclical fund from State Street Investment Management: $22.5B under management, 47 holdings, a 0.08% expense ratio, a 0.78% trailing dividend yield.
Portfolio overlap between VWO and XLY
The two portfolios are largely distinct: 0.0% of the funds' weight sits in the same underlying holdings (2 common positions). Correlation tells you they move together; overlap tells you why.
Largest positions held only by VWO: 2330 (18.65%), 700 (3.97%), 9988 (2.90%), 2454 (1.62%), 939 (1.07%). Only by XLY: AMZN (24.32%), TSLA (16.18%), HD (5.54%), MCD (4.11%), BKNG (4.04%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-07-31. Top 2 common positions shown.
Year-by-year returns
| Year | VWO | XLY |
|---|---|---|
| 2022 | -18.0% | -36.3% |
| 2023 | +9.3% | +39.6% |
| 2024 | +10.6% | +26.5% |
| 2025 | +25.6% | +7.4% |
| 2026 | +13.6% | -2.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are VWO and XLY good diversifiers for each other?
Somewhat, no more. With 0.61 correlation, most large moves hit both names, and the diversification benefit stays modest.
FAQ
What is the correlation between VWO and XLY?
The VWO/XLY correlation stands at 0.61 on a 3-year window (1 year: 0.67, 5 years: 0.57), computed from weekly returns as of 2026-08-27.
Is XLY a good diversifier for VWO?
Somewhat, no more. With 0.61 correlation, most large moves hit both names, and the diversification benefit stays modest.
How much do VWO and XLY overlap?
Per the issuers' own portfolio disclosures (2026-07-31), the overlap is 0.0% by weight over 2 common positions.
Use this data
$ curl https://www.pairbook.io/api/v1/pairs/vwo-vs-xly.json
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Hubs: VWO correlations · XLY correlations
