Real Estate (XLRE) vs Utilities (XLU)
Live side-by-side comparison with current values, changes, and key statistics.
Why This Comparison Matters
XLRE and XLU are both rate-sensitive bond proxies. When XLRE outperforms XLU, it usually means property fundamentals (occupancy, rents, data-center demand) are strong enough to offset rate headwinds. When XLU outperforms XLRE, pure rate sensitivity is dominating and commercial real estate stress may be weighing on REITs.
Cross-Asset Analysis
To orient the reader: Real Estate (XLRE) represents real Estate Select Sector SPDR Fund, rate-sensitive and Utilities (XLU) represents utilities Select Sector SPDR Fund, defensive, rate-sensitive, which is why this comparison sits in the ratio pair category on Convex. The Real Estate (XLRE) against Utilities (XLU) ratio has told the same macro story for decades: one sector leads in certain regimes, the other leads in their opposites. Earnings growth trajectories differ between Real Estate (XLRE) and Utilities (XLU) based on sector composition, and the relative path of those trajectories drives the spread over multi-quarter horizons.
Secular trends can extend the Real Estate (XLRE)-Utilities (XLU) ratio for years, as the rise of growth over value in the 2010s illustrated across many sector pairs. Portfolio managers use the Real Estate (XLRE)-Utilities (XLU) ratio as a tactical overlay because the sector-level factor structure is observable and historically robust. Sector rotation strategies trade the Real Estate (XLRE)-Utilities (XLU) ratio directly, either through ETF pairs or concentrated security selection within each sector.
Policy-driven regime changes, including fiscal stimulus or regulatory shifts, can install durable tilts in the Real Estate (XLRE)-Utilities (XLU) ratio that persist through multiple cycles. Tactical allocators use ratio momentum and mean reversion together on the Real Estate (XLRE)-Utilities (XLU) pair, recognizing that trends persist but also eventually reverse.
90-Day Statistics
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Frequently Asked Questions
What is the relationship between Real Estate (XLRE) and Utilities (XLU)?+
Real Estate (XLRE) and Utilities (XLU) are connected through sector-specific sensitivities to macro variables. When the relevant macro factor shifts, both respond, though with different sensitivities and at different speeds. The spread between Real Estate (XLRE) and Utilities (XLU) captures the specific macro signal that flows through this relationship.
When does Real Estate (XLRE) typically lead Utilities (XLU)?+
Real Estate (XLRE) tends to lead Utilities (XLU) during macro regime shifts that favor one sector over the other. In those periods, moves in Real Estate (XLRE) precede corresponding moves in Utilities (XLU) by days to weeks, depending on the transmission channel and the depth of each market.
How are Real Estate (XLRE) and Utilities (XLU) historically correlated?+
Long-run correlation between Real Estate (XLRE) and Utilities (XLU) varies by regime. Sector pairs show persistent rotation patterns driven by macro regime, with correlation positive on direction but wide on magnitude. The correlation is not stable: it shifts with macro conditions, and the periods when it breaks down are often the most informative moments in the Real Estate (XLRE)-Utilities (XLU) relationship.
What macro conditions drive divergence between Real Estate (XLRE) and Utilities (XLU)?+
Divergence between Real Estate (XLRE) and Utilities (XLU) typically arises from sector composition changes, sector-specific Fed policy effects, or foreign capital flow shifts. When one asset's idiosyncratic drivers dominate, the spread moves in ways that the common macro story does not predict, which is usually a signal to look more carefully at the specific drivers at work in Real Estate (XLRE) or Utilities (XLU).
Is Real Estate (XLRE) a hedge for Utilities (XLU)?+
Sector pairs including Real Estate (XLRE) and Utilities (XLU) are rotation trades, not hedges; both can fall together in a broad market decline. Effective hedging requires matching the hedge to the specific risk being protected, and the Real Estate (XLRE)-Utilities (XLU) pair is best stress-tested under scenarios the investor most worries about before being sized into a real portfolio.
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Data sourced from FRED, CoinGecko, CBOE, and other providers. This page is for informational purposes only and does not constitute financial advice. Past performance does not guarantee future results.