VYM vs XLY: Correlation & Overlap
How closely do Vanguard High Dividend Yield ETF (VYM) and Consumer Discretionary Select Sector SPDR Fund (XLY) trade together? Their weekly returns over three years give a correlation of 0.65, which is strong. By holdings, the two funds overlap 5.4% by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are VYM and XLY?
Across a 3-year window, the weekly returns of VYM and XLY correlate at 0.65, strong. The past 12 months show a weaker link (0.47) than the 3-year average (0.65). Stretching to 5 years gives 0.68, with an annualized covariance of 156.8 %².
Within VYM's tracked universe of 122 assets, XLY comes in at #52 by 3-year correlation. The last year tells two different stories: VYM led by 21.2 percentage points, +21.1% for VYM against -0.1% for XLY. Across three years, the rolling one-year figure varied moderately, from 0.48 to 0.83. Risk is not evenly split, since XLY carries 1.6 times the volatility of the other side.
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 XLY: side by side
| VYM (Vanguard High Dividend Yield ETF) | XLY (Consumer Discretionary Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +21.1% | -0.1% |
| 5-year return | +76.6% | +31.8% |
| Volatility (ann.) | 12.3% | 19.7% |
| Beta vs S&P 500 | 0.69 | 1.15 |
| Max drawdown (3Y) | -14.5% | -26.0% |
| Dividend yield | 2.24% | 0.78% |
| Expense ratio | 0.04% | 0.08% |
| Assets under management | $99.2B | $22.5B |
| 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. 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 VYM and XLY
The two portfolios are largely distinct: 5.4% of the funds' weight sits in the same underlying holdings (22 common positions). Correlation tells you they move together; overlap tells you why.
| Common holding | Weight in VYM | Weight in XLY |
|---|---|---|
| HD | 1.35% | 5.54% |
| MCD | 0.78% | 4.11% |
| SBUX | 0.49% | 3.08% |
| LOW | 0.47% | 2.94% |
| RCL | 0.33% | 1.80% |
| F | 0.23% | 1.36% |
| EBAY | 0.21% | 1.15% |
| NKE | 0.20% | 1.15% |
| GRMN | 0.20% | 1.18% |
| YUM | 0.17% | 1.06% |
| CCL | 0.14% | 0.82% |
| TPR | 0.13% | 0.66% |
| WSM | 0.11% | 0.70% |
| DRI | 0.09% | 0.62% |
| LEN | 0.07% | 0.47% |
Largest positions held only by VYM: AVGO (7.37%), JPM (3.83%), XOM (2.63%), JNJ (2.51%), CSCO (1.87%). Only by XLY: AMZN (24.32%), TSLA (16.18%), BKNG (4.04%), TJX (3.55%), DASH (2.24%).
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 | XLY |
|---|---|---|
| 2022 | -0.4% | -36.3% |
| 2023 | +6.6% | +39.6% |
| 2024 | +17.6% | +26.5% |
| 2025 | +15.4% | +7.4% |
| 2026 | +15.9% | -2.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are VYM and XLY good diversifiers for each other?
Only partially. A correlation of 0.65 means VYM and XLY 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 VYM and XLY?
The VYM/XLY correlation stands at 0.65 on a 3-year window (1 year: 0.47, 5 years: 0.68), computed from weekly returns as of 2026-08-27.
Is XLY a good diversifier for VYM?
Only partially. A correlation of 0.65 means VYM and XLY share most of their swings. Pairing them dampens volatility somewhat, but it will not protect against a common drawdown.
How much do VYM and XLY overlap?
Per the issuers' own portfolio disclosures (2026-07-31), the overlap is 5.4% by weight over 22 common positions.
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