The use of a coherent frequency-hopped radar for pulse compression and frequency domain interferometry is considered. An analytical model for the two-frequency correlation at the output from a matched filter receiver is developed that includes the effects of finite beam width. The analysis is restricted to the case of vertically directed radar beam. This result is used to derive the effective height weighting function that can be obtained by appropriate superposition of the receiver output from multiple frequencies. The result is also used to study the normalized correlation, or coherence, which is used in the frequency domain interferometry technique. The influence of finite beam width on the altitude resolution and coherence function is illustrated, and practical applications and limitations of the technique are discussed.