Graphical representation of Value at Risk

Hello, everyone,

I would like to graphically represent Value at Risk by colouring the area under the graph of a density function associated with the alpha confidence level. In other words I would like to replicate a figure like the one attached.

Thank you all and have a nice day :)

[Torsten]

The area to the left looks greater than 0.05 :-)

[Alessio Imperi Galli]

I think it was just a demonstrative image

Answer 1

[Prahlad Gowtham Katte]

Hello

As per my understanding of the query you want to indicate certain areas within the curve with a different color and this can be achieved by area function. The code below is an example of how you can change the colors within the area under curve.

mu = 0.5;
sigma = 1;
pd = makedist('Normal','mu',mu,'sigma',sigma);
x = -4:0.1:6;
y = pdf(pd,x);
x_color=x(1:length(x(x<=0.05)));% x co-ordinates of required area
y_color=y(1:length(x(x<=0.05)));% y co-ordinates of required area
area(x_color,y_color,'FaceColor','r');% coloring the required area with red
x_color=x(length(x(x<=0.05)):end);
y_color=y(length(x(x<=0.05)):end);
hold on;
area(x_color,y_color,'FaceColor','g');%coloring the rest of the area with green

For more information on how to use area function please refer to the following link

Filled area 2-D plot - MATLAB area (mathworks.com)

Hope it helps!