Background: Correlation between the expression levels of genes which are located close to each other on the genome has been found in various organisms, including yeast, drosophila and humans. Since such a correlation could be explained by several biochemical, evolutionary, genetic and technological factors, there is a need for statistical models that correspond to specific biological models for the correlation structure. Results: We modelled the pairwise correlation between the expressions of the genes in a Drosophila microarray experiment as a normal mixture under Fisher's z-transform, and fitted the model to the correlations of expressions of adjacent as well as non-adjacent genes. We also analyzed simulated data for comparison. The model provided a good fit to the data. Further, correlation between the activities of two genes could, in most cases, be attributed to either of two factors: the two genes both being active in the same age group ( adult or embryo), or the two genes being in proximity of each other on the chromosome. The interaction between these two factors was weak. Conclusions: Correlation between the activities of adjacent genes is higher than between non-adjacent genes. In the data we analyzed, this appeared, for the most part, to be a constant effect that applied to all pairs of adjacent genes.