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In this paper, we examine the interlinkages among firms through a financialnetwork where cross-holdings on both equity and debt are allowed. We relatemathematically the correlation among equities with the unconditionalcorrelation of the assets, the values of their business assets and thesensitivity of the network, particularly the $\Delta$-Greek. We noticed alsothis relation is independent of the Equities level. Besides, for the two-firmscase, we analytically demonstrate that the equities correlation is alwayshigher than the correlation of the assets; showing this issue by numericalillustrations. Finally, we study the relation between equity correlations andasset prices, where the model arrives to an increase in the former due to afall in the assets.

Cross-ownership as a structural explanation for rising correlations in crisis times