To make diverse or various in form or quality; to give variety to; to variegate; to distinguish by numerous differences or aspects.

spread into new habitats and produce variety or variegate; "The plants on this island diversified"

vary in order to spread risk or to expand; "The company diversified"

This is a practice to reduce an investor's risk. It does so by purchasing different securities from various companies, locations and governments.

to spread out the money you invest into different types of investments: bonds, stocks, CDs, mutual funds, etc. The idea is to avoid putting all your eggs in one basket. Different kinds of investments do well in different kinds of economic climates. Therefore, if one of your investments drops in value, the other kinds of investments should hold or increase their value.

To reduce risk in a portfolio by spreading investments among a number of different bond or stock issuers or issues that are not perfectly correlated so that losses in any one bond/stock/security do not impact the whole portfolio, and may be partially offset by gains in other securities holdings.