Which ETFs diversify a portfolio of VTI 60%, VXUS 30% and BND 10% the most?
Over the 156 weeks to 2026-10-12, among 27 large US ETFs, the bond ETF with the lowest weekly correlation with VTI 60%, VXUS 30% and BND 10% was SHY, at 0.13, the sector stock ETF XLE, at 0.16, and the commodity ETF GLD, at 0.23.
Correlation measures how two ETFs move together: 1 means always together, 0 means no link, below 0 means opposite.
Measurement, not investment advice.
What are the top 3 ETFs that diversify the portfolio most?
Out of the 27 large US ETFs of the list, the lowest weekly correlation with the portfolio, one ETF per group so that the 3 are different kinds of exposure, lowest first.
1Bonds
iShares 1-3 Year Treasury Bond ETF
0.13weekly correlation with the portfolio
Moved almost independently of the portfolio
- When the portfolio fell-0.21 correlation over the 58 weeks the portfolio fell: it tended to move the other way
- With 10% in it11.2% volatility, instead of 12.4% without it
2Sector stocks
Energy Select Sector SPDR Fund
0.16weekly correlation with the portfolio
Moved almost independently of the portfolio
- When the portfolio fell0.60 correlation over the 58 weeks the portfolio fell: it moved mostly with it
- With 10% in it11.7% volatility, instead of 12.4% without it
3Commodities
SPDR Gold Shares
0.23weekly correlation with the portfolio
Moved partly with the portfolio
- When the portfolio fell0.15 correlation over the 58 weeks the portfolio fell: it moved almost independently
- With 10% in it11.7% volatility, instead of 12.4% without it
How do the other 24 ETFs of the list compare?
The top 3 take one ETF per group; the others follow from 4, lowest correlation first, each with its weekly correlation with the portfolio and its correlation over the weeks the portfolio fell.
4IEFBonds
iShares 7-10 Year Treasury Bond ETF
0.15Moved almost independently of the portfolio, 156 weeks
When the portfolio fell: -0.25
5TLTBonds
iShares 20+ Year Treasury Bond ETF
0.15Moved almost independently of the portfolio, 156 weeks
When the portfolio fell: -0.24
6TIPBonds
iShares TIPS Bond ETF
0.25Moved partly with the portfolio, 156 weeks
When the portfolio fell: -0.09
7XLUSector stocks
Utilities Select Sector SPDR Fund
0.30Moved partly with the portfolio, 156 weeks
When the portfolio fell: 0.27
8LQDBonds
iShares iBoxx Investment Grade Corporate Bond ETF
0.36Moved partly with the portfolio, 156 weeks
When the portfolio fell: -0.12
9XLPSector stocks
Consumer Staples Select Sector SPDR Fund
0.38Moved partly with the portfolio, 156 weeks
When the portfolio fell: 0.22
Show the other 18
10XLVSector stocks
Health Care Select Sector SPDR Fund
0.46Moved partly with the portfolio, 156 weeks
When the portfolio fell: 0.36
11VNQSector stocks
Vanguard Real Estate ETF
0.57Moved mostly with the portfolio, 156 weeks
When the portfolio fell: 0.40
12IGFSector stocks
iShares Global Infrastructure ETF
0.58Moved mostly with the portfolio, 156 weeks
When the portfolio fell: 0.47
13SCHDUS stocks, lowest of its group
Schwab US Dividend Equity ETF
0.63Moved mostly with the portfolio, 156 weeks
When the portfolio fell: 0.69
14VNQISector stocks
Vanguard Global ex-U.S. Real Estate ETF
0.71Moved mostly with the portfolio, 156 weeks
When the portfolio fell: 0.43
15AVUVUS stocks
Avantis U.S. Small Cap Value ETF
0.71Moved mostly with the portfolio, 155 weeks
When the portfolio fell: 0.67
16HYGBonds
iShares iBoxx High Yield Corporate Bond ETF
0.75Moved mostly with the portfolio, 156 weeks
When the portfolio fell: 0.56
17USMVUS stocks
iShares MSCI USA Min Vol Factor ETF
0.75Moved mostly with the portfolio, 156 weeks
When the portfolio fell: 0.63
18AVDVInternational stocks, lowest of its group
Avantis International Small Cap Value ETF
0.81Moved closely with the portfolio, 155 weeks
When the portfolio fell: 0.80
19VWOEmerging market stocks, lowest of its group
Vanguard FTSE Emerging Markets ETF
0.81Moved closely with the portfolio, 156 weeks
When the portfolio fell: 0.69
20IWMUS stocks
iShares Russell 2000 ETF
0.83Moved closely with the portfolio, 156 weeks
When the portfolio fell: 0.74
21VTVUS stocks
Vanguard Value ETF
0.83Moved closely with the portfolio, 156 weeks
When the portfolio fell: 0.78
22MTUMUS stocks
iShares MSCI USA Momentum Factor ETF
0.85Moved closely with the portfolio, 155 weeks
When the portfolio fell: 0.73
23VEAInternational stocks
Vanguard FTSE Developed Markets ETF
0.88Moved closely with the portfolio, 156 weeks
When the portfolio fell: 0.81
24RSPUS stocks
Invesco S&P 500 Equal Weight ETF
0.89Moved closely with the portfolio, 156 weeks
When the portfolio fell: 0.84
25VOUS stocks
Vanguard Mid-Cap ETF
0.90Moved closely with the portfolio, 156 weeks
When the portfolio fell: 0.86
26QQQUS stocks
Invesco QQQ Trust
0.90Moved closely with the portfolio, 156 weeks
When the portfolio fell: 0.77
27QUALUS stocks
iShares MSCI USA Quality Factor ETF
0.94Moved closely with the portfolio, 155 weeks
When the portfolio fell: 0.88
Weekly returns over the 156 weeks to 2026-10-12; down weeks are the 58 weeks the portfolio's weekly return was below zero. VTI, VXUS and BND are in the list and held, so they are left out. Overlap by weight of XLE with VTI and VXUS: pair by pair in the ETF overlap calculator.
How did $100 grow in the portfolio, SHY, XLE and GLD?
The same 156 weeks for every line, to 2026-10-12. Where a coloured line moves differently from the black one, that ETF moved differently from the portfolio.
$100 in the portfolio became $178 over the 156 weeks from 2023-10-20 to 2026-10-12; in SHY $112, in XLE $161 and in GLD $208. Each line compounds the weekly returns the correlations are measured on.
How closely did SHY, XLE and GLD follow the portfolio, week by week?
The flatter the cloud, the less the ETF follows the portfolio.
Each dot is one of the 156 weeks to 2026-10-12. Its position across is the weekly return of VTI 60%, VXUS 30% and BND 10%, and its height is the weekly return of the ETF named on the panel.
- The 58 down weeks, when your ETFs fell (left of the zero line)
- The other 98 weeks
SHY
Correlation 0.13, on down weeks -0.21
XLE
Correlation 0.16, on down weeks 0.60
GLD
Correlation 0.23, on down weeks 0.15
The panels use the same weeks and weekly returns as the correlations above. In every panel, the scale across runs from -10% to +10% and the scale up from -20% to +20%. The weekly returns come from the fund files of VTI, VXUS, BND, SHY, XLE and GLD.
How volatile were SHY, XLE and GLD?
Volatility: how much the weekly returns varied, annualised.
| ETF | Weekly correlation156 weeks to 2026-10-12 | On down weeksthe 58 weeks the portfolio fell | Volatilityannualised, 156 weeks |
|---|---|---|---|
| SHYiShares 1-3 Year Treasury Bond ETFBonds | 0.13 | -0.21 | 1.6% |
| |||
| XLEEnergy Select Sector SPDR FundSector stocks | 0.16 | 0.60 | 22.9% |
| |||
| GLDSPDR Gold SharesCommodities | 0.23 | 0.15 | 18.6% |
| |||
| VTI, VXUS, BNDyour ETFs, at your weights | 12.4% | ||
| |||
- With 10% in SHY and 90% in VTI, VXUS and BND at their weights, the portfolio's annualised weekly volatility over the 156 weeks to 2026-10-12 would have been 11.2% instead of 12.4%.
- With 10% in XLE and 90% in VTI, VXUS and BND at their weights, the portfolio's annualised weekly volatility over the 156 weeks to 2026-10-12 would have been 11.7% instead of 12.4%.
- With 10% in GLD and 90% in VTI, VXUS and BND at their weights, the portfolio's annualised weekly volatility over the 156 weeks to 2026-10-12 would have been 11.7% instead of 12.4%.
What do SHY, XLE and GLD hold, next to your portfolio?
Each ETF's weight in mega-cap tech, its largest sector or asset and its largest country outside the US, with your portfolio in the last row for comparison.
| ETF | Holdings file | Mega-cap tech | Largest sector or asset | Largest outside the US |
|---|---|---|---|---|
| SHYiShares 1-3 Year Treasury Bond ETF | SEC Form N-PORT, 2026-05-31 | None | US Treasury notes and bonds 99.0%Money market funds 1.8% | Not measured |
| ||||
| XLEEnergy Select Sector SPDR Fund | Issuer file, 2026-10-12 | 0.0% | Energy 99.8% | None, 99.8% US |
| ||||
| GLDSPDR Gold Shares | Trust's own SEC filing, 2026-06-30 | None | Gold 100.0% | Not measured |
| ||||
| Your portfolioVTI 60%, VXUS 30% and BND 10% | 90% looked through | 19.2% | Technology 25.8% | Japan 4.7% |
| ||||
Questions and answers
- Which ETF in each group of the list had the lowest weekly correlation with VTI 60%, VXUS 30% and BND 10%?
- SHY 0.13 (bonds), XLE 0.16 (sector stocks), GLD 0.23 (commodities), SCHD 0.63 (US stocks), AVDV 0.81 (international stocks) and VWO 0.81 (emerging market stocks), over the 156 weeks to 2026-10-12, among 27 large US ETFs.
- How did SHY, XLE and GLD move on the weeks the portfolio fell?
- On the 58 weeks the portfolio fell, of the 156 to 2026-10-12, their weekly correlation with VTI 60%, VXUS 30% and BND 10% was -0.21 for SHY, 0.60 for XLE and 0.15 for GLD.
- How would 10% in SHY, XLE or GLD have changed the volatility of VTI 60%, VXUS 30% and BND 10%?
- Over the 156 weeks to 2026-10-12, the annualised weekly volatility of VTI 60%, VXUS 30% and BND 10% was 12.4%; with 10% in SHY it would have been 11.2%, in XLE 11.7%, and in GLD 11.7%.
How each figure is measured, and the order of the table: how the numbers are produced.
The 30 ETFs and the rule
From the ETFs of the list, leaving out any ETF the portfolio holds: in each group, the ETF whose weekly returns had the lowest correlation with the portfolio's over the weeks both have, up to 156, compared before rounding; the answer opens on the 3 groups whose lowest is lowest, and an exact tie keeps the order of the list.
- US stocks
- VTI, RSP, QQQ, VTV, SCHD, VO, IWM, AVUV, USMV, QUAL, MTUM
- Sector stocks
- XLU, XLP, XLV, XLE, VNQ, VNQI, IGF
- International stocks
- VXUS, VEA, AVDV
- Emerging market stocks
- VWO
- Bonds
- BND, SHY, IEF, TLT, TIP, LQD, HYG
- Commodities
- GLD
Chosen on 2026-10-10: 30 large US ETFs across six kinds of exposure, one ETF per exposure, the same list for every portfolio. Left out on purpose: S&P 500 ETFs weighted by company size, near duplicates of VTI; sector ETFs for technology, financials, industrials, consumer discretionary, communication services and materials; Treasury bills; single commodities other than gold; gold miners; bitcoin; and leveraged, inverse and volatility products. The list and its weekly returns as one file: candidates.json.
