XLB vs XLE: Correlation & Overlap
Materials Select Sector SPDR Fund (XLB) and Energy Select Sector SPDR Fund (XLE) show a moderate relationship: their 3-year correlation of weekly returns is 0.30. 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 XLE?
On 3 years of weekly data the XLB/XLE correlation comes out at 0.30, moderate. The past 12 months show a weaker link (-0.08) than the 3-year average (0.30). The 5-year figure is 0.42, and annualized covariance runs at 117.5 %².
Among the 140 assets we track against XLB, XLE ranks #129 by 3-year correlation. Correlation aside, the last 12 months split them widely, with XLE ahead by 26.4 points (+17.6% versus +44.0%). The relationship is regime-dependent: the rolling one-year correlation swung between -0.07 and 0.62 over the past three years, so this pair behaves very differently depending on the market environment.
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 XLE: side by side
| XLB (Materials Select Sector SPDR Fund) | XLE (Energy Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +17.6% | +44.0% |
| 5-year return | +36.9% | +206.7% |
| Volatility (ann.) | 16.7% | 23.1% |
| Beta vs S&P 500 | 0.72 | 0.27 |
| Max drawdown (3Y) | -23.2% | -20.1% |
| Dividend yield | 1.68% | 2.55% |
| Expense ratio | 0.08% | 0.08% |
| Assets under management | $8.3B | $39.2B |
| Sector / category | Sector ETF | Sector ETF |
On the fund side, XLB sits in the Natural Resources category at State Street Investment Management, with $8.3B under management, 26 holdings, a 0.08% expense ratio, a 1.68% trailing dividend yield. XLE is an Equity Energy fund from State Street Investment Management: $39.2B under management, 22 holdings, a 0.08% expense ratio, a 2.55% trailing dividend yield.
Portfolio overlap between XLB and XLE
The two portfolios are largely distinct: 0% of the funds' weight sits in the same underlying holdings (0 common positions). Correlation tells you they move together; overlap tells you why.
Largest positions held only by XLB: LIN (12.94%), NEM (8.02%), FCX (6.48%), SHW (4.87%), ECL (4.80%). Only by XLE: XOM (20.03%), CVX (14.84%), COP (6.30%), MPC (5.40%), PSX (5.37%).
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 | XLE |
|---|---|---|
| 2022 | -12.3% | +64.3% |
| 2023 | +12.5% | -0.6% |
| 2024 | +0.1% | +5.6% |
| 2025 | +9.9% | +7.9% |
| 2026 | +18.3% | +41.2% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are XLB and XLE good diversifiers for each other?
Reasonably. At 0.30, XLB and XLE keep a meaningful degree of independence, and combining them has historically reduced portfolio volatility.
FAQ
What is the correlation between XLB and XLE?
The XLB/XLE correlation stands at 0.30 on a 3-year window (1 year: -0.08, 5 years: 0.42), computed from weekly returns as of 2026-08-27.
Is XLE a good diversifier for XLB?
Reasonably. At 0.30, XLB and XLE keep a meaningful degree of independence, and combining them has historically reduced portfolio volatility.
How much do XLB and XLE overlap?
The two funds share 0 holdings amounting to 0% of weight, per issuer portfolio files dated 2026-08-26.
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Hubs: XLB correlations · XLE correlations
