XLB vs XLC: Correlation & Overlap
Materials Select Sector SPDR Fund (XLB) and Communication Services Select Sector SPDR Fund (XLC) show a moderate relationship: their 3-year correlation of weekly returns is 0.42. The two funds also share 0% of their portfolios by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are XLB and XLC?
On 3 years of weekly data the XLB/XLC correlation comes out at 0.42, moderate. Lately the two have drifted apart, with the 1-year correlation at 0.09 versus 0.42 over 3 years. The 5-year figure is 0.56, and annualized covariance runs at 110.9 %².
Within XLB's tracked universe of 140 assets, XLC comes in at #124 by 3-year correlation. Their recent paths diverged sharply: over the last 12 months XLB outperformed by 16.1 percentage points (+17.6% for XLB against +1.5% for XLC). This link changes with the market regime, having swung between 0.12 and 0.72 on a rolling one-year basis.
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.
XLB vs XLC: side by side
| XLB (Materials Select Sector SPDR Fund) | XLC (Communication Services Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +17.6% | +1.5% |
| 5-year return | +36.9% | +37.5% |
| Volatility (ann.) | 16.7% | 16.0% |
| Beta vs S&P 500 | 0.72 | 0.90 |
| Max drawdown (3Y) | -23.2% | -18.0% |
| Dividend yield | 1.68% | 1.32% |
| Expense ratio | 0.08% | 0.08% |
| Assets under management | $8.3B | $21.7B |
| Sector / category | Sector ETF | Sector ETF |
XLB, State Street Investment Management's Natural Resources fund, carries $8.3B under management, 26 holdings, a 0.08% expense ratio, a 1.68% trailing dividend yield. On the fund side, XLC sits in the Communications category at State Street Investment Management, with $21.7B under management, 24 holdings, a 0.08% expense ratio, a 1.32% trailing dividend yield.
Portfolio overlap between XLB and XLC
The two portfolios are largely distinct, with 0 holdings in common adding up to 0% of fund weight. Where correlation shows the co-movement, the overlap shows its source.
Largest positions held only by XLB: LIN (12.94%), NEM (8.02%), FCX (6.48%), SHW (4.87%), ECL (4.80%). Only by XLC: META (16.73%), GOOGL (10.29%), GOOG (8.22%), T (5.20%), VZ (4.99%).
Overlap = sum of the smaller of the two weights across common holdings, from issuer disclosures as of 2026-08-26.
Year-by-year returns
| Year | XLB | XLC |
|---|---|---|
| 2022 | -12.3% | -37.6% |
| 2023 | +12.5% | +52.8% |
| 2024 | +0.1% | +34.7% |
| 2025 | +9.9% | +23.1% |
| 2026 | +18.3% | -4.8% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are XLB and XLC good diversifiers for each other?
Reasonably. At 0.42, XLB and XLC keep a meaningful degree of independence, and combining them has historically reduced portfolio volatility.
FAQ
What is the correlation between XLB and XLC?
As of 2026-08-27, the correlation of weekly returns between XLB and XLC is 0.42 over 3 years, 0.09 over 1 year and 0.56 over 5 years.
Is XLC a good diversifier for XLB?
Reasonably. At 0.42, XLB and XLC keep a meaningful degree of independence, and combining them has historically reduced portfolio volatility.
How much do XLB and XLC overlap?
The two funds share 0 holdings amounting to 0% of weight, per issuer portfolio files dated 2026-08-26.
Use this data
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Hubs: XLB correlations · XLC correlations
