VYM vs XLF: Correlation & Overlap
How closely do Vanguard High Dividend Yield ETF (VYM) and Financial Select Sector SPDR Fund (XLF) trade together? Their weekly returns over three years give a correlation of 0.84, which is very strong. By holdings, the two funds overlap 19.0% by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are VYM and XLF?
On 3 years of weekly data the VYM/XLF correlation comes out at 0.84, very strong, meaning they move nearly in lockstep. The past 12 months show a weaker link (0.60) than the 3-year average (0.84). The 5-year figure is 0.88, and annualized covariance runs at 167.8 %².
Within VYM's tracked universe of 122 assets, XLF comes in at #14 by 3-year correlation. On 12-month performance VYM holds a 11.8-point edge, +21.1% against +9.3%. Across three years, the rolling one-year figure varied moderately, from 0.61 to 0.94.
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 XLF: side by side
| VYM (Vanguard High Dividend Yield ETF) | XLF (Financial Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +21.1% | +9.3% |
| 5-year return | +76.6% | +64.2% |
| Volatility (ann.) | 12.3% | 16.2% |
| Beta vs S&P 500 | 0.69 | 0.84 |
| Max drawdown (3Y) | -14.5% | -15.5% |
| Dividend yield | 2.24% | 1.42% |
| Expense ratio | 0.04% | 0.08% |
| Assets under management | $99.2B | $57.9B |
| Sector / category | ETF · Dividend | Sector ETF |
VYM, Vanguard's Large Value fund, carries $99.2B under management, 604 holdings, a 0.04% expense ratio, a 2.24% 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 VYM and XLF
The two portfolios partially overlap, with 51 holdings in common adding up to 19.0% of fund weight. Where correlation shows the co-movement, the overlap shows its source.
| Common holding | Weight in VYM | Weight in XLF |
|---|---|---|
| JPM | 3.83% | 11.61% |
| BAC | 1.67% | 4.94% |
| GS | 1.14% | 3.73% |
| WFC | 1.08% | 3.17% |
| MS | 0.96% | 3.12% |
| C | 0.89% | 2.77% |
| BLK | 0.68% | 2.06% |
| COF | 0.53% | 1.64% |
| PGR | 0.50% | 1.58% |
| CB | 0.50% | 1.51% |
| BNY | 0.44% | 1.36% |
| PNC | 0.41% | 1.19% |
| USB | 0.40% | 1.18% |
| CME | 0.39% | 1.24% |
| BX | 0.39% | 1.29% |
Largest positions held only by VYM: AVGO (7.37%), XOM (2.63%), JNJ (2.51%), CSCO (1.87%), ABBV (1.81%). Only by XLF: BRK.B (11.25%), V (7.74%), MA (5.87%), AXP (2.17%), SCHW (2.17%).
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 | XLF |
|---|---|---|
| 2022 | -0.4% | -10.6% |
| 2023 | +6.6% | +12.0% |
| 2024 | +17.6% | +30.6% |
| 2025 | +15.4% | +14.9% |
| 2026 | +15.9% | +6.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are VYM and XLF good diversifiers for each other?
No. With a correlation of 0.84, VYM and XLF move nearly in lockstep, so holding both adds very little diversification.
FAQ
What is the correlation between VYM and XLF?
As of 2026-08-27, the correlation of weekly returns between VYM and XLF is 0.84 over 3 years, 0.60 over 1 year and 0.88 over 5 years.
Is XLF a good diversifier for VYM?
No. With a correlation of 0.84, VYM and XLF move nearly in lockstep, so holding both adds very little diversification.
How much do VYM and XLF overlap?
Per the issuers' own portfolio disclosures (2026-07-31), the overlap is 19.0% by weight over 51 common positions.
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