XLC vs XLE: Correlation & Overlap
How closely do Communication Services Select Sector SPDR Fund (XLC) and Energy Select Sector SPDR Fund (XLE) trade together? Their weekly returns over three years give a correlation of 0.12, which is weak. By holdings, the two funds overlap 0% by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are XLC and XLE?
On 3 years of weekly data the XLC/XLE correlation comes out at 0.12, weak. The past 12 months show a weaker link (-0.29) than the 3-year average (0.12). The 5-year figure is 0.17, and annualized covariance runs at 44.0 %².
By 3-year correlation, XLE places #80 of the 91 assets tracked against XLC. Their recent paths diverged sharply: over the last 12 months XLE outperformed by 42.5 percentage points (+1.5% for XLC against +44.0% for XLE). This link changes with the market regime, having swung between -0.38 and 0.44 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.
XLC vs XLE: side by side
| XLC (Communication Services Select Sector SPDR Fund) | XLE (Energy Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +1.5% | +44.0% |
| 5-year return | +37.5% | +206.7% |
| Volatility (ann.) | 16.0% | 23.1% |
| Beta vs S&P 500 | 0.90 | 0.27 |
| Max drawdown (3Y) | -18.0% | -20.1% |
| Dividend yield | 1.32% | 2.55% |
| Expense ratio | 0.08% | 0.08% |
| Assets under management | $21.7B | $39.2B |
| Sector / category | Sector ETF | Sector ETF |
XLC, State Street Investment Management's Communications fund, carries $21.7B under management, 24 holdings, a 0.08% expense ratio, a 1.32% 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 XLC and XLE
The two portfolios are largely distinct. Weighing the shared positions, 0% of the two funds is identical, spread across 0 common holdings. That shared book is a large part of why the returns line up.
Largest positions held only by XLC: META (16.73%), GOOGL (10.29%), GOOG (8.22%), T (5.20%), VZ (4.99%). 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 | XLC | XLE |
|---|---|---|
| 2022 | -37.6% | +64.3% |
| 2023 | +52.8% | -0.6% |
| 2024 | +34.7% | +5.6% |
| 2025 | +23.1% | +7.9% |
| 2026 | -4.8% | +41.2% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are XLC and XLE good diversifiers for each other?
Yes: at 0.12, the two have gone their own ways historically, which is what genuine diversification looks like.
FAQ
What is the correlation between XLC and XLE?
The XLC/XLE correlation stands at 0.12 on a 3-year window (1 year: -0.29, 5 years: 0.17), computed from weekly returns as of 2026-08-27.
Is XLE a good diversifier for XLC?
Yes: at 0.12, the two have gone their own ways historically, which is what genuine diversification looks like.
How much do XLC and XLE overlap?
0% by weight, across 0 common holdings, based on issuer-disclosed portfolios as of 2026-08-26.
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Related comparisons
Hubs: XLC correlations · XLE correlations
