The Zhang–Levy–Granovskii (Z–L–G) model of the magnetorefractive effect (MRE) in granular films and the Jacquet–Valet (J–V) model, originally developed for magnetic multilayers, are compared and their common origin demonstrated. Simulations in an extended Hagen–Rubens (H–R) model give new insight into the variation with wavelength of the MRE, and the relative dependence of giant magnetoresistance (GMR) and the MRE to material and experimental parameters such as bulk and interface scattering parameters, mean free paths, grain diameter, polarisation and reflection geometry is explored. The sensitivity of the size, wavelength dependence and the position of the depth of the minimum in the MRE spectra to the different parameters is verified. We establish powerful new equations to correlate the MRE and GMR, and we analyse their validity for a variety of film parameters. This suggests a new approach to the use of the MRE in sensing GMR in the films.