When the youngster left City, he cited a lack of senior game time as a key reason for his departure.
However, he has only played three substitute appearances for Los Blancos since joining in January.
Diaz was hoping to make the type of impact Jadon Sancho has enjoyed at Borussia Dortmund.
However, Real is a more competitive environment. And with the club planning a big spending spree, it is hard to see where Diaz fits in during the short term.
This has lead to Spanish media publications to label Diaz as a 'forgotten man' and someone who has 'fallen into oblivion'.