It isn’t really ever stated if she’s his daughter or not. There’s evidence for and against this statement. There are mentions that the Wizard had connection to the villagers and that Caroline was seen around his tower before. And because of his troubled history with the Witch, the Wizard tried to keep her a secret in order to protect her from any possible problems. But there are still many other girls and women that can be considered his daughter such as Caroline, Marnie, Robin, Penny, Emily or Pam. So you can’t say for certain with this theory.