The verification of the location information utilized in wireless communication networks is a subject of growing importance. In this work we formally analyze, for the first time, the performance of a wireless Location Verification System (LVS) under the realistic setting of spatially correlated shadowing. Our analysis illustrates that anticipated levels of correlated shadowing can lead to a dramatic performance improvement of a Received Signal Strength (RSS)-based LVS. We also analyze the performance of an LVS that utilizes Differential Received Signal Strength (DRSS), formally proving the rather counter-intuitive result that a DRSS-based LVS has identical performance to that of an RSS-based LVS, for all levels of correlated shadowing. Even more surprisingly, the identical performance of RSS and DRSS-based LVSs is found to hold even when the adversary does not optimize his true location. Only in the case where the adversary does not optimize all variables under her control, do we find the performance of an RSS-based LVS to be better than a DRSS-based LVS. The results reported here are important for a wide range of emerging wireless communication applications whose proper functioning depends on the authenticity of the location information reported by a transceiver.