Natural Collocations (Finance)
Solution 1:
Probably the former.
We generally say something varies if it changes over time. Diversifying a stock portfolio means investing it so that multiple securities with different risk profiles are held at the same time.
So
He diversifies his stock portfolio
means the portfolio contains a diversity of risks at any single moment, but doesn't say anything about whether this diverse portfolio ever needs adjustment, whereas
He varies his stock portfolio
means that he changes the contents of the portfolio over time.