Holding two ETFs feels like diversification — two tickers, two different funds. But if you own both VOO and QQQ, a large slice of your portfolio is the same handful of mega-cap tech names, just counted twice with different labels. That's concentration risk hiding inside what looks like a balanced portfolio.
Weighted overlap measures the part that really is shared: for each holding that appears in both ETFs, we take the minimum of its weight in each side and sum those minimums. The result is a single number you can act on — keep both, drop one, or rebalance.