XLE vs XLF: Correlation & Overlap
Energy Select Sector SPDR Fund (XLE) and Financial Select Sector SPDR Fund (XLF) show a moderate relationship: their 3-year correlation of weekly returns is 0.34. 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 XLE and XLF?
On 3 years of weekly data the XLE/XLF correlation comes out at 0.34, moderate. The past 12 months show a weaker link (-0.15) than the 3-year average (0.34). The 5-year figure is 0.43, and annualized covariance runs at 126.4 %².
Within XLE's tracked universe of 121 assets, XLF comes in at #73 by 3-year correlation. The last year tells two different stories: XLE led by 34.7 percentage points, +44.0% for XLE against +9.3% for XLF. The relationship is regime-dependent: the rolling one-year correlation swung between -0.14 and 0.71 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.
XLE vs XLF: side by side
| XLE (Energy Select Sector SPDR Fund) | XLF (Financial Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +44.0% | +9.3% |
| 5-year return | +206.7% | +64.2% |
| Volatility (ann.) | 23.1% | 16.2% |
| Beta vs S&P 500 | 0.27 | 0.84 |
| Max drawdown (3Y) | -20.1% | -15.5% |
| Dividend yield | 2.55% | 1.42% |
| Expense ratio | 0.08% | 0.08% |
| Assets under management | $39.2B | $57.9B |
| Sector / category | Sector ETF | Sector ETF |
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. 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 XLE 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 XLE: XOM (20.03%), CVX (14.84%), COP (6.30%), MPC (5.40%), PSX (5.37%). 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 | XLE | XLF |
|---|---|---|
| 2022 | +64.3% | -10.6% |
| 2023 | -0.6% | +12.0% |
| 2024 | +5.6% | +30.6% |
| 2025 | +7.9% | +14.9% |
| 2026 | +41.2% | +6.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are XLE and XLF good diversifiers for each other?
Yes, to a useful degree: a correlation of 0.34 leaves real independence between the two, which historically damped combined volatility.
FAQ
What is the correlation between XLE and XLF?
Using weekly returns as of 2026-08-27: 0.34 over 3 years, with -0.15 over the last year and 0.43 over 5 years.
Is XLF a good diversifier for XLE?
Yes, to a useful degree: a correlation of 0.34 leaves real independence between the two, which historically damped combined volatility.
How much do XLE 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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Hubs: XLE correlations · XLF correlations
