XLC vs XLF: Correlation & Overlap
Communication Services Select Sector SPDR Fund (XLC) and Financial Select Sector SPDR Fund (XLF) show a strong relationship: their 3-year correlation of weekly returns is 0.63. 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 XLF?
Across a 3-year window, the weekly returns of XLC and XLF correlate at 0.63, strong. The link has loosened recently: the 1-year correlation (0.48) runs below the 3-year figure (0.63). Stretching to 5 years gives 0.63, with an annualized covariance of 161.9 %².
Within XLC's tracked universe of 91 assets, XLF comes in at #28 by 3-year correlation. The trailing year gives XLF the advantage: +1.5% versus +9.3%, a 7.8-point spread. Across three years, the rolling one-year figure varied moderately, from 0.28 to 0.77.
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 XLF: side by side
| XLC (Communication Services Select Sector SPDR Fund) | XLF (Financial Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +1.5% | +9.3% |
| 5-year return | +37.5% | +64.2% |
| Volatility (ann.) | 16.0% | 16.2% |
| Beta vs S&P 500 | 0.90 | 0.84 |
| Max drawdown (3Y) | -18.0% | -15.5% |
| Dividend yield | 1.32% | 1.42% |
| Expense ratio | 0.08% | 0.08% |
| Assets under management | $21.7B | $57.9B |
| Sector / category | Sector ETF | Sector ETF |
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. 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 XLC and XLF
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 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 | XLC | XLF |
|---|---|---|
| 2022 | -37.6% | -10.6% |
| 2023 | +52.8% | +12.0% |
| 2024 | +34.7% | +30.6% |
| 2025 | +23.1% | +14.9% |
| 2026 | -4.8% | +6.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are XLC and XLF good diversifiers for each other?
Only partially. A correlation of 0.63 means XLC and XLF 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 XLC and XLF?
As of 2026-08-27, the correlation of weekly returns between XLC and XLF is 0.63 over 3 years, 0.48 over 1 year and 0.63 over 5 years.
Is XLF a good diversifier for XLC?
Only partially. A correlation of 0.63 means XLC and XLF share most of their swings. Pairing them dampens volatility somewhat, but it will not protect against a common drawdown.
How much do XLC and XLF overlap?
Per the issuers' own portfolio disclosures (2026-08-26), the overlap is 0% by weight over 0 common positions.
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Hubs: XLC correlations · XLF correlations
