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Diaz and the Flames agreed to a one-year deal Monday, Chris Johnston of Sportsnet reports.
Diaz has collected three assists in four appearances for the Flames during exhibition play.
The Red Wings have extended Diaz a training camp tryout, but the defenseman has not decided if he will accept it, reports MLive.com.
Diaz will likely sit out Saturday's Game 2 against the Kings, the Bergen Record reports.
Diaz dressed for the first time this postseason in Monday's loss to Pittsburgh, skating 19:30 and taking a game-high six shots on goal.