Graphical representation of Value at Risk
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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 :)
Prahlad Gowtham Katte on 17 Mar 2022
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
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
Hope it helps!