Diversification vs volatility

Energy sources
Discuss the impact of energy source diversification on market volatility.

Hint

Answer

Diversification of energy sources helps in reducing market volatility. By relying on a mix of energy sources, markets can better absorb shocks due to supply disruptions or demand fluctuations in any single source. Renewable energy integration, in particular, although variable, adds to this diversification and can help stabilize long-term energy prices and reduce dependence on fossil fuels.