XLK vs. MSFT

Last updated Jul 21, 2026

XLK (State Street Technology Select Sector SPDR ETF) is Technology Equities fund tracking the S&P Technology Select Sector Daily Capped 35/20 Index, while MSFT (Microsoft Corporation) is a stock. Over the past 10 years, XLK returned 23.89%/yr vs 23.18%/yr for MSFT. A 0.75 correlation means they provide meaningful diversification when combined.

Performance

XLK vs. MSFT - Performance Comparison

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

Returns By Period

In the year-to-date period, XLK achieves a 22.34% return, which is significantly higher than MSFT's -16.45% return. Both investments have delivered pretty close results over the past 10 years, with XLK having a 23.89% annualized return and MSFT not far behind at 23.18%.

XLK

• 1D: 0.07%
• 1M: -8.11%
• 6M: 20.96%
• YTD: 22.34%
• 1Y: 35.41%
• 3Y*: 26.73%
• 5Y*: 19.16%
• 10Y*: 23.89%
• ALL TIME*: 10.23%

MSFT

• 1D: 2.15%
• 1M: 6.03%
• 6M: -12.13%
• YTD: -16.45%
• 1Y: -20.50%
• 3Y*: 6.20%
• 5Y*: 8.30%
• 10Y*: 23.18%
• ALL TIME*: 24.73%

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

XLK vs. MSFT - Yearly Performance Comparison

	2026 (YTD)	2025	2024	2023	2022	2021	2020	2019	2018	2017
XLK State Street Technology Select Sector SPDR ETF	22.34%	24.61%	21.63%	56.02%	-27.73%	34.74%	43.62%	49.86%	-1.68%	34.26%
MSFT Microsoft Corporation	-16.45%	15.58%	12.93%	58.19%	-28.02%	52.48%	42.53%	57.56%	20.80%	40.73%

Correlation

The correlation between XLK and MSFT is 0.38, which is low. Their price movements are largely independent, making them effective diversification partners.

	Correlation
Correlation (1Y) Calculated over the trailing 1-year period	0.38
Correlation (3Y) Calculated over the trailing 3-year period	0.62
Correlation (5Y) Calculated over the trailing 5-year period	0.76
Correlation (10Y) Calculated over the trailing 10-year period	0.80
Correlation (All Time) Calculated using the full available price history since Dec 22, 1998	0.75

Over the past year, the correlation between XLK and MSFT has dropped to 0.38 - well below their long-term average of 0.75, suggesting their price drivers have been diverging.

Return for Risk

XLK vs. MSFT — Risk / Return Rank

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

XLK

XLK Risk / Return Rank: 54
XLK Sharpe Ratio Rank: 57
XLK Sortino Ratio Rank: 51
XLK Omega Ratio Rank: 52
XLK Calmar Ratio Rank: 60
XLK Martin Ratio Rank: 52

MSFT

MSFT Risk / Return Rank: 17
MSFT Sharpe Ratio Rank: 12
MSFT Sortino Ratio Rank: 15
MSFT Omega Ratio Rank: 15
MSFT Calmar Ratio Rank: 23
MSFT Martin Ratio Rank: 20

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.

XLK vs. MSFT - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for State Street Technology Select Sector SPDR ETF (XLK) and Microsoft Corporation (MSFT). 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.

	XLK	MSFT	Difference
Sharpe ratio: Return per unit of total volatility	1.45	-0.75	+2.20
Sortino ratio: Return per unit of downside risk	1.93	-0.93	+2.86
Omega ratio: Gain probability vs. loss probability	1.25	0.88	+0.36
Calmar ratio: Return relative to maximum drawdown	2.23	-0.60	+2.83
Martin ratio: Return relative to average drawdown	6.53	-1.10	+7.63

XLK vs. MSFT - Sharpe Ratio Comparison

The current XLK Sharpe Ratio is 1.45, which is higher than the MSFT Sharpe Ratio of -0.75. The chart below compares the historical Sharpe Ratios of XLK and MSFT, 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

XLK vs. MSFT - Drawdown Comparison

The maximum XLK drawdown since its inception was -82.05%, which is greater than MSFT's maximum drawdown of -69.38%. Use the drawdown chart below to compare losses from any high point for XLK and MSFT.

Drawdown Indicators

	XLK	MSFT	Difference
Max Drawdown Largest peak-to-trough decline	-82.05%	-69.38%	-12.67%
Max Drawdown (1Y) Largest decline over 1 year	-15.92%	-34.50%	+18.58%
Max Drawdown (3Y) Largest decline over 3 years	-25.66%	-34.50%	+8.84%
Max Drawdown (5Y) Largest decline over 5 years	-33.56%	-37.15%	+3.59%
Max Drawdown (10Y) Largest decline over 10 years	-33.56%	-37.15%	+3.59%
Current Drawdown Current decline from peak	-11.25%	-25.32%	+14.07%
Average Drawdown Average peak-to-trough decline	-34.83%	-21.80%	-13.03%
Ulcer Index Depth and duration of drawdowns from previous peaks	5.43%	18.74%	-13.31%

Volatility

XLK vs. MSFT - Volatility Comparison

The current volatility for State Street Technology Select Sector SPDR ETF (XLK) is 9.59%, while Microsoft Corporation (MSFT) has a volatility of 10.25%. This indicates that XLK experiences smaller price fluctuations and is considered to be less risky than MSFT based on this measure. The chart below showcases a comparison of their rolling one-month volatility.

Volatility by Period

	XLK	MSFT	Difference
Volatility (1M) Calculated over the trailing 1-month period	9.59%	10.25%	-0.66%
Volatility (6M) Calculated over the trailing 6-month period	20.94%	24.51%	-3.57%
Volatility (1Y) Calculated over the trailing 1-year period	24.61%	27.52%	-2.91%
Volatility (5Y) Calculated over the trailing 5-year period, annualized	25.57%	27.07%	-1.50%
Volatility (10Y) Calculated over the trailing 10-year period, annualized	24.81%	27.15%	-2.34%

Dividends

XLK vs. MSFT - Dividend Comparison

XLK's dividend yield for the trailing twelve months is around 0.45%, less than MSFT's 0.88% yield.

Position	TTM	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
MSFT Microsoft Corporation	0.88%	0.70%	0.73%	0.74%	1.06%	0.68%	0.94%	1.20%	1.69%	1.86%	2.37%	2.33%
XLK State Street Technology Select Sector SPDR ETF	0.45%	0.54%	0.66%	0.76%	1.04%	0.65%	0.92%	1.16%	1.60%	1.37%	1.74%	1.79%

Frequently Asked Questions

Can I hold both XLK and MSFT in my portfolio?

XLK and MSFT have a correlation of 0.38, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.

Which is riskier, XLK or MSFT?

MSFT has higher volatility (10.25%) compared to XLK (9.59%). In terms of maximum drawdown, XLK dropped -82.05% vs MSFT's -69.38%.

Which has better risk-adjusted returns?

XLK currently has the higher Sharpe Ratio (1.45 vs -0.75), 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.