XLF vs. ARCC

Last updated Jun 14, 2026

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

Performance

XLF vs. ARCC - Performance Comparison

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

Returns By Period

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

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%

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

XLF vs. ARCC - Yearly Performance Comparison

	2026 (YTD)	2025	2024	2023	2022	2021	2020	2019	2018	2017
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%
ARCC Ares Capital Corporation	-2.20%	1.07%	19.78%	20.03%	-3.84%	36.14%	0.86%	31.30%	8.81%	4.50%

Correlation

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

Return for Risk

XLF vs. ARCC — Risk / Return Rank

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

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

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

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.

XLF vs. ARCC - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for State Street Financial Select Sector SPDR ETF (XLF) and Ares Capital Corporation (ARCC). 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.

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

XLF vs. ARCC - Sharpe Ratio Comparison

The current XLF Sharpe Ratio is 0.42, which is higher than the ARCC Sharpe Ratio of -0.27. The chart below compares the historical Sharpe Ratios of XLF and ARCC, 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

XLF vs. ARCC - Drawdown Comparison

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

Drawdown Indicators

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

Volatility

XLF vs. ARCC - Volatility Comparison

State Street Financial Select Sector SPDR ETF (XLF) has a higher volatility of 4.23% compared to Ares Capital Corporation (ARCC) at 3.72%. This indicates that XLF's price experiences larger fluctuations and is considered to be riskier than ARCC based on this measure. The chart below showcases a comparison of their rolling one-month volatility.

Volatility by Period

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

Dividends

XLF vs. ARCC - Dividend Comparison

XLF's dividend yield for the trailing twelve months is around 1.49%, less than ARCC's 9.97% 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 XLF and ARCC in my portfolio?

XLF and ARCC 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, XLF or ARCC?

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

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.