Is it possible to resize the model bounds to fit to its content?

Yes. You can use Model.SizeToContent property to reisize the model bounds to fit to its content. Please refer the below code snippet to achieve this:

C#

// Resizes the model bounds to fit to its content.

this.diagram1.Model.SizeToContent = true;

VB

' Resizes the model bounds to fit to its content.

Me.diagram1.Model.SizeToContent = True