XLB vs XLF: Correlation & Overlap
Measured on weekly returns over the past three years, Materials Select Sector SPDR Fund (XLB) and Financial Select Sector SPDR Fund (XLF) carry a correlation of 0.61, a strong link. 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 XLF?
On 3 years of weekly data the XLB/XLF correlation comes out at 0.61, strong. The link has loosened recently: the 1-year correlation (0.20) runs below the 3-year figure (0.61). The 5-year figure is 0.72, and annualized covariance runs at 166.1 %².
Among the 140 assets we track against XLB, XLF ranks #65 by 3-year correlation. Over the last 12 months XLB came out ahead by 8.3 percentage points (+17.6% against +9.3%). Do not treat this figure as fixed: across three years the rolling one-year correlation ranged all the way from 0.24 to 0.87.
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 XLF: side by side
| XLB (Materials Select Sector SPDR Fund) | XLF (Financial Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +17.6% | +9.3% |
| 5-year return | +36.9% | +64.2% |
| Volatility (ann.) | 16.7% | 16.2% |
| Beta vs S&P 500 | 0.72 | 0.84 |
| Max drawdown (3Y) | -23.2% | -15.5% |
| Dividend yield | 1.68% | 1.42% |
| Expense ratio | 0.08% | 0.08% |
| Assets under management | $8.3B | $57.9B |
| 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. 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 XLB and XLF
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 XLF: JPM (11.61%), BRK.B (11.25%), V (7.74%), MA (5.87%), BAC (4.94%).
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 | XLF |
|---|---|---|
| 2022 | -12.3% | -10.6% |
| 2023 | +12.5% | +12.0% |
| 2024 | +0.1% | +30.6% |
| 2025 | +9.9% | +14.9% |
| 2026 | +18.3% | +6.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are XLB and XLF good diversifiers for each other?
Somewhat, no more. With 0.61 correlation, most large moves hit both names, and the diversification benefit stays modest.
FAQ
What is the correlation between XLB and XLF?
As of 2026-08-27, the correlation of weekly returns between XLB and XLF is 0.61 over 3 years, 0.20 over 1 year and 0.72 over 5 years.
Is XLF a good diversifier for XLB?
Somewhat, no more. With 0.61 correlation, most large moves hit both names, and the diversification benefit stays modest.
How much do XLB and XLF overlap?
The two funds share 0 holdings amounting to 0% of weight, per issuer portfolio files dated 2026-08-26.
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