In this paper, we propose a cyber-event fusion, correlation, and situation assessment framework that, when instantiated, will allow cyber defenders to better understand the local, regional, and global cyber-situation. This framework, with associated metrics, can be used to guide assessment of our existing cyber-defense capabilities, and to help evaluate the state of cyber-event correlation research and where we must focus our future cyber-event correlation research. The framework, based on the cyber-event gathering activities and analysis functions, consists of five operational steps, each of which provides a richer set of contextual information to support greater situational understanding. The first three steps are categorically depicted as increasingly richer and broader-scoped contexts achieved through correlation activity, while in the final two steps, these richer contexts are achieved through analytical activities (situation assessment, and threat analysis & prediction). Category 1 Correlation focuses on the detection of suspicious activities and the correlation of events from a single cyber-event source. Category 2 Correlation clusters the same or similar events from multiple detectors that are located at close proximity and prioritizes them. Finally, the events from different time periods and event sources at different location/regions are correlated at Category 3 to recognize the relationship among different events. This is the category that focuses on the detection of large-scale and coordinated attacks. The situation assessment step (Category 4) focuses on the assessment of cyber asset damage and the analysis of the impact on missions. The threat analysis and prediction step (Category 5) analyzes attacks based on attack traces and predicts the next steps. Metrics that can distinguish correlation and cyber-situation assessment tools for each category are also proposed.