  We present a neutron diffraction study of NaYbO$_2$, a candidate quantum spin
liquid compound hosting a geometrically frustrated triangular lattice of
magnetic Yb$^{3+}$ ions. We observe diffuse magnetic scattering that persists
to at least 20 K, demonstrating the presence of short-range magnetic
correlations in this system up to a relatively high energy scale. Using reverse
Monte Carlo and magnetic pair distribution function analysis, we confirm the
predominant antiferromagnetic nature of these correlations and show that the
diffuse scattering data can be well described by noninteracting layers of XY
spins on the triangular lattice. We rule out Ising spins and
short-range-ordered stripe or 120$^{\circ}$ phases as candidate ground states
of NaYbO$_2$. These results are consistent with a possible QSL ground state in
NaYbO$_2$ and showcase the benefit of combined reciprocal- and real-space
analysis of materials with short-range magnetic correlations.
