The Nelson–Siegel model is widely used in fixed income markets to produce yield curve dynamics. The multiple time-dependent parameter model conveniently addresses the level, slope, and curvature dynamics of the yield curves. In this study, we present a novel state-space functional regression model that incorporates a dynamic Nelson–Siegel (DNS) model and functional regression formulations applied to a multi-economy setting. This framework offers distinct advantages in explaining the relative spreads in yields between a reference economy and a response economy. To address the inherent challenges of model calibration, a kernel principal component analysis is employed to transform the representation of functional regression into a finite-dimensional, tractable estimation problem. A comprehensive empirical analysis is conducted to assess the efficacy of the functional regression approach, including an in-sample performance comparison with the DNS model. We conducted the stress testing analysis of the yield curves’ term structure within a dual economy framework. The bond ladder portfolio was examined through a case study focused on spread modeling using historical data for US Treasury and UK bonds.

Understanding spatial navigation and memory formation is critical to exploring how humans learn and adapt in complex environments. To investigate these processes, we conducted an experiment using the Minecraft Memory and Navigation Task, collecting detailed three-dimensional (3D) path data in a virtual open-world setting. Statistically, we developed a novel methodology to convert complex high-dimensional 3D movement data into functional representations, enabling standardized comparisons and analyses across participants and environments. We applied techniques such as functional clustering and regression to identify navigation patterns and their relationships with cognitive map development and memory retention. Our analysis uncovered two significant insights: first, participants who adopted moderately exploratory behaviors during training demonstrated superior retention of object locations; second, inefficient navigation strategies were strongly linked to poorer spatial memory and navigation performance. These findings highlight the effectiveness of our methodology in advancing the study of navigation behaviors and cognitive processes in dynamic 3D environments.