XLF vs XLU: Correlation & Overlap
Measured on weekly returns over the past three years, Financial Select Sector SPDR Fund (XLF) and Utilities Select Sector SPDR Fund (XLU) carry a correlation of 0.32, a moderate 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 XLF and XLU?
Across a 3-year window, the weekly returns of XLF and XLU correlate at 0.32, moderate. The past 12 months show a weaker link (-0.12) than the 3-year average (0.32). Stretching to 5 years gives 0.39, with an annualized covariance of 81.2 %².
Among the 169 assets we track against XLF, XLU ranks #153 by 3-year correlation. Over the last 12 months XLF came out ahead by 5.2 percentage points (+9.3% against +4.1%). This link changes with the market regime, having swung between -0.16 and 0.61 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.
XLF vs XLU: side by side
| XLF (Financial Select Sector SPDR Fund) | XLU (Utilities Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +9.3% | +4.1% |
| 5-year return | +64.2% | +46.3% |
| Volatility (ann.) | 16.2% | 15.8% |
| Beta vs S&P 500 | 0.84 | 0.26 |
| Max drawdown (3Y) | -15.5% | -13.1% |
| Dividend yield | 1.42% | 2.70% |
| Expense ratio | 0.08% | 0.08% |
| Assets under management | $57.9B | $23.1B |
| Sector / category | Sector ETF | Sector ETF |
XLF, State Street Investment Management's Financial fund, carries $57.9B under management, 77 holdings, a 0.08% expense ratio, a 1.42% trailing dividend yield. XLU is an Utilities fund from State Street Investment Management: $23.1B under management, 31 holdings, a 0.08% expense ratio, a 2.70% trailing dividend yield.
Portfolio overlap between XLF and XLU
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 XLF: JPM (11.61%), BRK.B (11.25%), V (7.74%), MA (5.87%), BAC (4.94%). Only by XLU: NEE (12.94%), SO (7.45%), DUK (7.00%), CEG (6.58%), AEP (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 | XLF | XLU |
|---|---|---|
| 2022 | -10.6% | +1.4% |
| 2023 | +12.0% | -7.2% |
| 2024 | +30.6% | +23.3% |
| 2025 | +14.9% | +16.0% |
| 2026 | +6.6% | +2.5% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are XLF and XLU good diversifiers for each other?
Yes, to a useful degree: a correlation of 0.32 leaves real independence between the two, which historically damped combined volatility.
FAQ
What is the correlation between XLF and XLU?
The XLF/XLU correlation stands at 0.32 on a 3-year window (1 year: -0.12, 5 years: 0.39), computed from weekly returns as of 2026-08-27.
Is XLU a good diversifier for XLF?
Yes, to a useful degree: a correlation of 0.32 leaves real independence between the two, which historically damped combined volatility.
How much do XLF and XLU 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: XLF correlations · XLU correlations
