[function] MATLAB error: Undefined function or method X for input arguments of type 'double'

The error code indicates the function definition cannot be found. Make sure you're calling the function from the same workspace as the divrat.m file is stored. And make sure divrat function is not a subfunction, it should be first function declaration in the file. You can also try to call the function from the same divrat.m file in order to see if the problem is with workspace selection or the function.

By the way, why didn't you simply say

s = sqrt(diag(C));

Wouldn't it be the same?