Many prediction and decision-making problems in operations research involve path-valued covariates -- data that evolve over time -- for which path signatures have become a canonical feature representation. Their use is justified by a universal approximation theorem, but this is an existence result: it guarantees that a finite-level signature can approximate any continuous path functional, without quantifying how fast the approximation error decreases as the truncation level grows. This paper develops approximation and statistical theory for signature-based path regression. We establish an \(L^2\) approximation rate for smooth functionals of Itô diffusions and show that it is minimax optimal. We then propagate the truncation error through three statistical learning procedures -- Signature-OLS, Signature-LASSO, and Signature-Logistic -- and establish their consistency. Three real-data applications show that signatures provide informative finite-dimensional representations of path-valued covariates and can improve prediction relative to handcrafted features, in the context of finance -- foreign exchange realized volatility forecasting from intraday price paths; energy -- battery end-of-life prediction from early diagnostic current-voltage pulse paths; and medicine -- epileptic seizure detection from short electroencephalogram windows.

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