ARCC vs. XLF

Last updated Jun 13, 2026

ARCC (Ares Capital Corporation) is a stock, while XLF (State Street Financial Select Sector SPDR ETF) is Financials Equities fund tracking the Financial Select Sector Index. Over the past 10 years, ARCC returned 13.20%/yr vs 13.33%/yr for XLF. A 0.55 correlation means they provide meaningful diversification when combined.

Performance

ARCC vs. XLF - Performance Comparison

The chart below illustrates the hypothetical performance of a $10,000 investment in Ares Capital Corporation (ARCC) and State Street Financial Select Sector SPDR ETF (XLF). The values are adjusted to include any dividend payments, if applicable.

Returns By Period

The year-to-date returns for both investments are quite close, with ARCC having a -2.20% return and XLF slightly higher at -2.11%. Both investments have delivered pretty close results over the past 10 years, with ARCC having a 13.20% annualized return and XLF not far ahead at 13.33%.

ARCC

• 1D: 1.00%
• 1M: 1.69%
• YTD: -2.20%
• 6M: -2.87%
• 1Y: -3.87%
• 3Y*: 10.27%
• 5Y*: 9.04%
• 10Y*: 13.20%

XLF

• 1D: 1.37%
• 1M: 4.00%
• YTD: -2.11%
• 6M: -2.09%
• 1Y: 8.41%
• 3Y*: 18.86%
• 5Y*: 9.15%
• 10Y*: 13.33%

*Multi-year figures are annualized to reflect compound growth (CAGR)

ARCC vs. XLF - Yearly Performance Comparison

	2026 (YTD)	2025	2024	2023	2022	2021	2020	2019	2018	2017
ARCC Ares Capital Corporation	-2.20%	1.07%	19.78%	20.03%	-3.84%	36.14%	0.86%	31.30%	8.81%	4.50%
XLF State Street Financial Select Sector SPDR ETF	-2.11%	14.90%	30.56%	12.03%	-10.59%	34.80%	-1.74%	31.88%	-13.06%	22.00%

Correlation

The correlation between ARCC and XLF is 0.47, which is low. Their price movements are largely independent, making them effective diversification partners.

	Correlation
Correlation (1Y) Calculated over the trailing 1-year period	0.47
Correlation (3Y) Calculated over the trailing 3-year period	0.52
Correlation (5Y) Calculated over the trailing 5-year period	0.56
Correlation (10Y) Calculated over the trailing 10-year period	0.51
Correlation (All Time) Calculated using the full available price history since Oct 6, 2004	0.55

The correlation between ARCC and XLF has been stable across timeframes, ranging from 0.47 to 0.56 - a consistent structural relationship.

Return for Risk

ARCC vs. XLF — Risk / Return Rank

Compare risk-adjusted metric ranks to identify better-performing investments over the past 12 months.

ARCC

ARCC Risk / Return Rank: 31
ARCC Sharpe Ratio Rank: 31
ARCC Sortino Ratio Rank: 26
ARCC Omega Ratio Rank: 26
ARCC Calmar Ratio Rank: 35
ARCC Martin Ratio Rank: 35

XLF

XLF Risk / Return Rank: 15
XLF Sharpe Ratio Rank: 17
XLF Sortino Ratio Rank: 15
XLF Omega Ratio Rank: 15
XLF Calmar Ratio Rank: 15
XLF Martin Ratio Rank: 15

The rank (0–100) shows how this investment's returns compare to the risk taken. Higher = better. Based on the past 12 months of data, combining Sharpe, Sortino, and other metrics used by quantitative funds and institutional investors.

ARCC vs. XLF - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for Ares Capital Corporation (ARCC) and State Street Financial Select Sector SPDR ETF (XLF). Risk-adjusted metrics are performance indicators that assess an investment's returns in relation to its risk, enabling a more accurate comparison of different investment options.

Values are calculated on a 1-year rolling basis and updated daily. Risk-adjusted metrics are more stable over longer periods — use the period switch above to explore them.

	ARCC	XLF	Difference
Sharpe ratio: Return per unit of total volatility	-0.27	0.42	-0.70
Sortino ratio: Return per unit of downside risk	-0.26	0.67	-0.93
Omega ratio: Gain probability vs. loss probability	0.97	1.08	-0.11
Calmar ratio: Return relative to maximum drawdown	-0.26	0.42	-0.68
Martin ratio: Return relative to average drawdown	-0.47	1.08	-1.55

ARCC vs. XLF - Sharpe Ratio Comparison

The current ARCC Sharpe Ratio is -0.27, which is lower than the XLF Sharpe Ratio of 0.42. The chart below compares the historical Sharpe Ratios of ARCC and XLF, calculated using daily returns over the previous 12 months. A higher Sharpe Ratio indicates better risk-adjusted performance relative to the risk-free rate.

Drawdowns

ARCC vs. XLF - Drawdown Comparison

The maximum ARCC drawdown since its inception was -79.36%, roughly equal to the maximum XLF drawdown of -82.69%. Use the drawdown chart below to compare losses from any high point for ARCC and XLF.

Drawdown Indicators

	ARCC	XLF	Difference
Max Drawdown Largest peak-to-trough decline	-79.36%	-82.69%	+3.33%
Max Drawdown (1Y) Largest decline over 1 year	-19.35%	-14.79%	-4.56%
Max Drawdown (3Y) Largest decline over 3 years	-19.35%	-15.54%	-3.81%
Max Drawdown (5Y) Largest decline over 5 years	-21.76%	-25.81%	+4.05%
Max Drawdown (10Y) Largest decline over 10 years	-56.77%	-42.86%	-13.91%
Current Drawdown Current decline from peak	-10.98%	-4.94%	-6.04%
Average Drawdown Average peak-to-trough decline	-9.10%	-20.01%	+10.91%
Ulcer Index Depth and duration of drawdowns from previous peaks	10.68%	5.76%	+4.92%

Volatility

ARCC vs. XLF - Volatility Comparison

The current volatility for Ares Capital Corporation (ARCC) is 3.72%, while State Street Financial Select Sector SPDR ETF (XLF) has a volatility of 4.23%. This indicates that ARCC experiences smaller price fluctuations and is considered to be less risky than XLF based on this measure. The chart below showcases a comparison of their rolling one-month volatility.

Volatility by Period

	ARCC	XLF	Difference
Volatility (1M) Calculated over the trailing 1-month period	3.72%	4.23%	-0.51%
Volatility (6M) Calculated over the trailing 6-month period	14.83%	11.26%	+3.57%
Volatility (1Y) Calculated over the trailing 1-year period	18.48%	14.69%	+3.79%
Volatility (5Y) Calculated over the trailing 5-year period, annualized	19.96%	18.66%	+1.30%
Volatility (10Y) Calculated over the trailing 10-year period, annualized	25.58%	22.17%	+3.41%

Dividends

ARCC vs. XLF - Dividend Comparison

ARCC's dividend yield for the trailing twelve months is around 9.97%, more than XLF's 1.49% yield.

Position	TTM	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
ARCC Ares Capital Corporation	7.48%	9.49%	8.77%	9.59%	10.12%	7.65%	9.47%	9.01%	9.88%	9.67%	9.22%	11.02%
XLF State Street Financial Select Sector SPDR ETF	1.49%	1.31%	1.42%	1.71%	2.04%	1.63%	2.03%	1.87%	2.08%	1.48%	21.10%	1.95%

Frequently Asked Questions

Can I hold both ARCC and XLF in my portfolio?

ARCC and XLF have a correlation of 0.47, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.

Which is riskier, ARCC or XLF?

XLF has higher volatility (4.23%) compared to ARCC (3.72%). In terms of maximum drawdown, ARCC dropped -79.36% vs XLF's -82.69%.

Which has better risk-adjusted returns?

XLF currently has the higher Sharpe Ratio (0.42 vs -0.27), meaning it's delivered slightly more return per unit of risk over the trailing 12 months. However, this ranking shifts over time - use the Risk/Return Score above for a more comprehensive view that combines Sharpe, Sortino, and other measures used by quantitative funds.