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One of the key problems hindering the realization of optical burst switching (OBS) technology in the core networks is the losses due to contention among the bursts at the core nodes. Such contention losses do not necessarily indicate a situation of congestion. Burst segmentation is an effective contention resolution technique used to reduce the number of packets lost due to the burst losses. In this work, we propose a method of analyzing the benefit of burst segmentation considering the effect of correlation in traffic across multiple paths. Starting with the cumulative distribution function (cdf) of the length of the bursts at the ingress node destined to a particular egress node, we evaluate the cdf of the burst length at each node along the path considering the probability of segmentation and the traffic on the adjoining paths. Comparing the burst length at the egress node with that at the ingress node, we evaluate the byte loss probability (ByLP) along the path and also the network-wide average ByLP. The proposed analytical framework studies the impact of segmentation on packet loss rate considering the effect of the length of a path, the number of paths adjoining a path (extent of path correlation), the effect of load on a path and other correlated paths, and the burst assembly algorithm. Analytical and simulation results in this work show that the proposed method of analysis gives a good understanding of the influence of aforementioned factors on the benefit of segmentation in OBS networks.