XLP vs XLY: Correlation & Overlap
Measured on weekly returns over the past three years, Consumer Staples Select Sector SPDR Fund (XLP) and Consumer Discretionary Select Sector SPDR Fund (XLY) carry a correlation of 0.28, a weak link. Looking through to holdings, 0% of the two portfolios is the same by weight.
Data as of 2026-08-27 · refreshed every trading day · weekly returns · methodology
How correlated are XLP and XLY?
Across a 3-year window, the weekly returns of XLP and XLY correlate at 0.28, weak. Lately the two have drifted apart, with the 1-year correlation at 0.06 versus 0.28 over 3 years. Stretching to 5 years gives 0.46, with an annualized covariance of 61.7 %².
Among the 110 assets we track against XLP, XLY ranks #82 by 3-year correlation. On 12-month performance XLP holds a 8.4-point edge, +8.3% against -0.1%. The rolling one-year correlation moved between 0.06 and 0.48 over the past three years, a moderate range. Note the risk asymmetry: XLY runs 1.8 times the annualized volatility of the other leg, so equal-weighting the two is not an equal-risk position.
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.
XLP vs XLY: side by side
| XLP (Consumer Staples Select Sector SPDR Fund) | XLY (Consumer Discretionary Select Sector SPDR Fund) | |
|---|---|---|
| 1-year return | +8.3% | -0.1% |
| 5-year return | +34.7% | +31.8% |
| Volatility (ann.) | 11.1% | 19.7% |
| Beta vs S&P 500 | 0.23 | 1.15 |
| Max drawdown (3Y) | -9.7% | -26.0% |
| Dividend yield | 2.58% | 0.78% |
| Expense ratio | 0.08% | 0.08% |
| Assets under management | $14.6B | $22.5B |
| Sector / category | Sector ETF | Sector ETF |
On the fund side, XLP sits in the Consumer Defensive category at State Street Investment Management, with $14.6B under management, 35 holdings, a 0.08% expense ratio, a 2.58% trailing dividend yield. XLY is a Consumer Cyclical fund from State Street Investment Management: $22.5B under management, 47 holdings, a 0.08% expense ratio, a 0.78% trailing dividend yield.
Portfolio overlap between XLP and XLY
The two portfolios are largely distinct, with 0 holdings in common adding up to 0% of fund weight. Where correlation shows the co-movement, the overlap shows its source.
Largest positions held only by XLP: WMT (9.62%), COST (8.92%), KO (7.34%), PG (7.10%), PM (6.36%). Only by XLY: AMZN (24.32%), TSLA (16.18%), HD (5.54%), MCD (4.11%), BKNG (4.04%).
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 | XLP | XLY |
|---|---|---|
| 2022 | -0.8% | -36.3% |
| 2023 | -0.8% | +39.6% |
| 2024 | +12.2% | +26.5% |
| 2025 | +1.5% | +7.4% |
| 2026 | +10.9% | -2.6% |
Calendar-year price returns; the current year is year-to-date as of the data date above.
Are XLP and XLY good diversifiers for each other?
Reasonably. At 0.28, XLP and XLY keep a meaningful degree of independence, and combining them has historically reduced portfolio volatility.
FAQ
What is the correlation between XLP and XLY?
Using weekly returns as of 2026-08-27: 0.28 over 3 years, with 0.06 over the last year and 0.46 over 5 years.
Is XLY a good diversifier for XLP?
Reasonably. At 0.28, XLP and XLY keep a meaningful degree of independence, and combining them has historically reduced portfolio volatility.
How much do XLP and XLY overlap?
The two funds share 0 holdings amounting to 0% of weight, per issuer portfolio files dated 2026-08-26.
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