The correlation that results in the price of a 0% to X% collateralized debt obligation tranche (CBO tranche) being consistent with the market for a particular value of X. All tranches in such an instrument are decomposed into combinations of base tranches (equity tranches).

The base refers to the fact that the subordination of the base tranche is zero in all cases. Under the base correlation framework, the leverage component tends to be smaller especially for the mezzanine tranche.