XAR vs. NATO

Last updated Jun 4, 2026

XAR (SPDR S&P Aerospace & Defense ETF) and NATO (Themes Transatlantic Defense ETF) are both Aerospace & Defense funds - XAR tracks the S&P Aerospace & Defense Select Industry Index while NATO tracks the Solactive Transatlantic Aerospace and Defense Index. Both are passively managed. Over the past year, XAR returned 41.33% vs 13.50% for NATO. Their correlation of 0.81 suggests significant overlap in exposure. Both charge a 0.35% expense ratio.

Performance

XAR vs. NATO - Performance Comparison

The chart below illustrates the hypothetical performance of a $10,000 investment in SPDR S&P Aerospace & Defense ETF (XAR) and Themes Transatlantic Defense ETF (NATO). The values are adjusted to include any dividend payments, if applicable.

Returns By Period

In the year-to-date period, XAR achieves a 13.40% return, which is significantly higher than NATO's 1.39% return.

XAR

• 1D: -2.08%
• 1M: 7.34%
• YTD: 13.40%
• 6M: 20.10%
• 1Y: 41.33%
• 3Y*: 34.11%
• 5Y*: 16.26%
• 10Y*: 18.01%

NATO

• 1D: -1.87%
• 1M: 2.05%
• YTD: 1.39%
• 6M: 7.82%
• 1Y: 13.50%
• 3Y*: —
• 5Y*: —
• 10Y*: —

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

XAR vs. NATO - Yearly Performance Comparison

	2026 (YTD)	2025	2024
XAR SPDR S&P Aerospace & Defense ETF	13.40%	46.15%	3.83%
NATO Themes Transatlantic Defense ETF	1.39%	50.95%	0.35%

Correlation

The correlation between XAR and NATO is 0.85, indicating a strong positive relationship between their price movements. Combining them offers limited diversification - they tend to fall together during downturns.

	Correlation
Correlation (1Y) Calculated over the trailing 1-year period	0.85
Correlation (All Time) Calculated using the full available price history since Oct 14, 2024	0.81

The correlation between XAR and NATO has been stable across timeframes, ranging from 0.81 to 0.85 - a consistent structural relationship.

Return for Risk

XAR vs. NATO — Risk / Return Rank

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

XAR

XAR Risk / Return Rank: 43
XAR Sharpe Ratio Rank: 43
XAR Sortino Ratio Rank: 43
XAR Omega Ratio Rank: 38
XAR Calmar Ratio Rank: 48
XAR Martin Ratio Rank: 42

NATO

NATO Risk / Return Rank: 19
NATO Sharpe Ratio Rank: 19
NATO Sortino Ratio Rank: 20
NATO Omega Ratio Rank: 19
NATO Calmar Ratio Rank: 20
NATO Martin Ratio Rank: 19

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.

XAR vs. NATO - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for SPDR S&P Aerospace & Defense ETF (XAR) and Themes Transatlantic Defense ETF (NATO). 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.

	XAR	NATO	Difference
Sharpe ratio: Return per unit of total volatility	1.55	0.65	+0.90
Sortino ratio: Return per unit of downside risk	2.21	1.07	+1.14
Omega ratio: Gain probability vs. loss probability	1.26	1.13	+0.13
Calmar ratio: Return relative to maximum drawdown	2.41	0.85	+1.56
Martin ratio: Return relative to average drawdown	6.85	2.19	+4.66
Data is calculated on a 1-year rolling basis and updated daily. The trend shows the change in the indicator over the past month.

XAR vs. NATO - Sharpe Ratio Comparison

The current XAR Sharpe Ratio is 1.55, which is higher than the NATO Sharpe Ratio of 0.65. The chart below compares the historical Sharpe Ratios of XAR and NATO, calculated using daily returns over the previous 12 months. A higher Sharpe Ratio indicates better risk-adjusted performance relative to the risk-free rate.

Sharpe Ratios by Period

	XAR	NATO	Difference
Sharpe Ratio (1Y) Calculated over the trailing 1-year period	1.55	0.65	+0.90
Sharpe Ratio (5Y) Calculated over the trailing 5-year period	0.70	—	—
Sharpe Ratio (10Y) Calculated over the trailing 10-year period	0.73	—	—
Sharpe Ratio (All Time) Calculated using the full available price history	0.85	1.34	-0.49

Drawdowns

XAR vs. NATO - Drawdown Comparison

The maximum XAR drawdown since its inception was -46.37%, which is greater than NATO's maximum drawdown of -15.99%. Use the drawdown chart below to compare losses from any high point for XAR and NATO.

Drawdown Indicators

	XAR	NATO	Difference
Max Drawdown Largest peak-to-trough decline	-46.37%	-15.99%	-30.38%
Max Drawdown (1Y) Largest decline over 1 year	-17.22%	-15.99%	-1.23%
Max Drawdown (3Y) Largest decline over 3 years	-19.73%	—	—
Max Drawdown (5Y) Largest decline over 5 years	-32.40%	—	—
Max Drawdown (10Y) Largest decline over 10 years	-46.37%	—	—
Current Drawdown Current decline from peak	-6.55%	-12.30%	+5.75%
Average Drawdown Average peak-to-trough decline	-6.79%	-3.71%	-3.08%
Ulcer Index Depth and duration of drawdowns from previous peaks	6.05%	6.17%	-0.12%

Volatility

XAR vs. NATO - Volatility Comparison

SPDR S&P Aerospace & Defense ETF (XAR) has a higher volatility of 9.52% compared to Themes Transatlantic Defense ETF (NATO) at 7.97%. This indicates that XAR's price experiences larger fluctuations and is considered to be riskier than NATO based on this measure. The chart below showcases a comparison of their rolling one-month volatility.

Volatility by Period

	XAR	NATO	Difference
Volatility (1M) Calculated over the trailing 1-month period	9.52%	7.97%	+1.55%
Volatility (6M) Calculated over the trailing 6-month period	22.39%	17.65%	+4.74%
Volatility (1Y) Calculated over the trailing 1-year period	26.81%	20.71%	+6.10%
Volatility (5Y) Calculated over the trailing 5-year period, annualized	23.41%	22.61%	+0.80%
Volatility (10Y) Calculated over the trailing 10-year period, annualized	24.62%	22.61%	+2.01%

XAR vs. NATO - Expense Ratio Comparison

Both XAR and NATO have an expense ratio of 0.35%.

Dividends

XAR vs. NATO - Dividend Comparison

XAR's dividend yield for the trailing twelve months is around 0.32%, less than NATO's 0.44% yield.

Position	TTM	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
NATO Themes Transatlantic Defense ETF	0.44%	0.45%	0.08%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
XAR SPDR S&P Aerospace & Defense ETF	0.32%	0.40%	0.66%	0.54%	0.50%	0.83%	0.63%	0.75%	1.19%	0.76%	1.09%	2.31%

Frequently Asked Questions

Can I hold both XAR and NATO in my portfolio?

XAR and NATO have a correlation of 0.85, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.

Which is riskier, XAR or NATO?

XAR has higher volatility (9.52%) compared to NATO (7.97%). In terms of maximum drawdown, XAR dropped -46.37% vs NATO's -15.99%.

Which ETF is better, XAR or NATO?

On 1-year performance, XAR leads with 41.33% vs 13.50% for NATO. Both ETFs have the same 0.35% expense ratio. On volatility, NATO has been the lower-risk option at 7.97%. The better choice depends on whether you care most about return, fees, risk, or income.

Which ETF has performed better, XAR or NATO?

Over the 1-year period, XAR has performed better with a 41.33% return vs 13.50%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.

Which ETF is cheaper, XAR or NATO?

XAR and NATO have the same expense ratio: 0.35% per year.

Which ETF pays a higher dividend yield, XAR or NATO?

NATO has the higher dividend yield at 0.44%, compared with 0.32% for XAR.

What is the main difference between XAR and NATO?

XAR tracks S&P Aerospace & Defense Select Industry Index, while NATO tracks Solactive Transatlantic Aerospace and Defense Index. They also come from different issuers: State Street and Themes.

Which has better risk-adjusted returns?

XAR currently has the higher Sharpe Ratio (1.55 vs 0.65), 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.