Since moving to Anfield from Porto in a £37.5m deal in January 2022, Diaz has established himself as a key player at the Premier League giants.
A total of 22 goals and 13 assists have been contributed from his 86 appearances in all competitions, defying a knee injury sustained in 2022-23 to re-emerge as a regular during this season.
Despite the occasional criticism regarding his form, the Colombia international has still chipped in with 11 goals and five assists.
Possessing a contract until 2027, it remains plausible that Diaz chooses to remain on Merseyside in the long term, even after a new manager arrives later this year.
However, that has not stopped the 27-year-old being linked with a move elsewhere, with Paris Saint-Germain among the clubs said to be monitoring the situation.
Should a transfer become a possibility in the future, clubs from Spain will naturally be interested, the likes of Barcelona already said to be admirers.
Nevertheless, at a time when the Catalan giants must first resolve their well-documented financial issues, a transfer to either Real Madrid or Atletico Madrid appears more likely.
Speaking to SER Deportivos before Colombia played Romania in a friendly at Atletico's Cívitas Metropolitano on Tuesday evening, father Mane Diaz has acknowledged that he would like to see his son ply his trade at one of the Madrid clubs in the future.
He said: "When he left Porto I was not aware that there was anything positive with Madrid clubs. I heard things, but I never knew if there was anything else.
"With Liverpool everything was more precise. The directive was more precise for Luis to arrive there.
"It was hoped that he could come here. [Radamel] Falcao had already been there, James [Rodriguez] too. In the end it didn't happen, but don't give up hope yet. He is playing and the clubs are active."
Falcao scored a remarkable 70 goals from 91 games for Atletico between 2011 and 2013, while James Rodriguez represented Real Madrid between 2014 and 2020, making 125 appearances.
As a result of over three years remaining on his contract, Liverpool may be resistant to all offers in the summer, unless Diaz expresses a desire to leave when Jurgen Klopp departs his role in the dugout in May.
Meanwhile, Real may be against bolstering their attacking ranks further if Kylian Mbappe arrives from Paris Saint-Germain, and Atletico may struggle to meet any valuation set by Liverpool.