VYM vs XLB: Correlation & Overlap
Vanguard High Dividend Yield ETF (VYM) and Materials Select Sector SPDR Fund (XLB) show a very strong relationship: their 3-year correlation of weekly returns is 0.81. The two funds also share 3.0% of their portfolios by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are VYM and XLB?
Over the past 3 years, VYM and XLB moved with a correlation of 0.81, which is very strong, meaning they move nearly in lockstep. The past 12 months show a weaker link (0.64) than the 3-year average (0.81). Over 5 years the correlation is 0.83, and the annualized covariance of weekly returns is 165.9 %².
By 3-year correlation, XLB places #21 of the 122 assets tracked against VYM. Neither side won the trailing year by much: +21.1% against +17.6%. The link looks structural: the rolling one-year correlation barely moved, holding between 0.67 and 0.90.
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.
VYM vs XLB: side by side
| VYM (Vanguard High Dividend Yield ETF) | XLB (Materials Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +21.1% | +17.6% |
| 5-year return | +76.6% | +36.9% |
| Volatility (ann.) | 12.3% | 16.7% |
| Beta vs S&P 500 | 0.69 | 0.72 |
| Max drawdown (3Y) | -14.5% | -23.2% |
| Dividend yield | 2.24% | 1.68% |
| Expense ratio | 0.04% | 0.08% |
| Assets under management | $99.2B | $8.3B |
| Sector / category | ETF · Dividend | Sector ETF |
VYM is a Large Value fund from Vanguard: $99.2B under management, 604 holdings, a 0.04% expense ratio, a 2.24% 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 VYM and XLB
The two portfolios are largely distinct, with 17 holdings in common adding up to 3.0% of fund weight. Where correlation shows the co-movement, the overlap shows its source.
| Common holding | Weight in VYM | Weight in XLB |
|---|---|---|
| LIN | 0.90% | 12.94% |
| NEM | 0.41% | 8.02% |
| APD | 0.26% | 4.71% |
| CRH | 0.26% | 4.12% |
| NUE | 0.23% | 4.28% |
| PPG | 0.10% | 3.32% |
| SW | 0.10% | 3.39% |
| DOW | 0.09% | 2.85% |
| IP | 0.09% | 2.86% |
| PKG | 0.09% | 2.85% |
| AMCR | 0.08% | 2.84% |
| IFF | 0.08% | 2.90% |
| CF | 0.08% | 2.52% |
| LYB | 0.07% | 2.11% |
| ALB | 0.06% | 2.07% |
Largest positions held only by VYM: AVGO (7.37%), JPM (3.83%), XOM (2.63%), JNJ (2.51%), CSCO (1.87%). Only by XLB: FCX (6.48%), SHW (4.87%), ECL (4.80%), CTVA (4.72%), VMC (4.26%).
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 | VYM | XLB |
|---|---|---|
| 2022 | -0.4% | -12.3% |
| 2023 | +6.6% | +12.5% |
| 2024 | +17.6% | +0.1% |
| 2025 | +15.4% | +9.9% |
| 2026 | +15.9% | +18.3% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are VYM and XLB good diversifiers for each other?
No. With a correlation of 0.81, VYM and XLB move nearly in lockstep, so holding both adds very little diversification.
FAQ
What is the correlation between VYM and XLB?
As of 2026-08-27, the correlation of weekly returns between VYM and XLB is 0.81 over 3 years, 0.64 over 1 year and 0.83 over 5 years.
Is XLB a good diversifier for VYM?
No. With a correlation of 0.81, VYM and XLB move nearly in lockstep, so holding both adds very little diversification.
How much do VYM and XLB overlap?
3.0% by weight, across 17 common holdings, based on issuer-disclosed portfolios as of 2026-07-31.
Use this data
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Related comparisons
Hubs: VYM correlations · XLB correlations
